NetSuite extends 100 per cent margin program for channel

Looking to further grow its channel coverage in Canada and around the world, on-demand enterprise resource planning (ERP) software vendor NetSuite Inc. (NYSE: N) is expanding its popular 100 per cent margins program, and is adding new resources and support for its growing channel community.

NetSuite launched its SP 100 program about a year ago. Designed to help partners transition from the traditional ERP on-premise model to a cloud-based service recurring revenue model, the program allowed partners to earn 100 per cent margins in the first year of a service contract, and 10 per cent on future years and renewals. Craig West, NetSuite’s vice-president of channel sales, said they launched the program because partners had expressed how difficult it was to transition their businesses to a cloud-based model. Once you’re up and running, the recurring revenue model is powerful, but the transition can be difficult.

“The SP 100 program has been wildly successful for us. We’ve recruited more partners, and larger and more sophisticated partners,” said West. “We had growth in our partner program of more than 40 per cent, year over year.”

West added the SP 100 program has also allowed NetSuite to have more of a business model-focused conversation with its partners, which has allowed the vendor to learn about other issues that were slowing partners’ path to productivity, leading to the additional support that NetSuite has recently announced for partners.

NetSuite has decided to continue the SP 100 program, with its 100 per cent margins in the first year on qualifying (multi-year) deals. It’s also continuing its traditional program, which offers 50 per cent margins on the first year, and 30 per cent on future years and renewals. Partners can choose which program is the best fit on a deal-by-deal basis, and West added once you hit year three, the traditional program offers higher profit for partners.

The real net-new though, said West, is a number of new channel support and enablement offerings NetSuite is making available under the SuiteStart label. The vendor is waving first-year enrollment fees for new channel partners, is offering free first-year sales and methodology training for up to three sales reps, a free NetSuite license for partners to use in their own business, and go-to-market support including marketing templates, start-up leads, and access to ongoing leads for top-performing partners.

“A key initiative for us this year is enablement,” said West. “We’re building a global partner enablement team; we’ve hired a practice leader and they’re recruiting a team that will go globally to look at best practices for a standard enablement model for new partners.”

In the past, West said NetSuite’s partner enablement model was primarily self-service: they’d give partners the map and let them hit the road. Some would speed down the highway and get there quickly; others would go more slowly and have a few detours along the way. NetSuite wants to work more proactively with new partners to help them get up and running, and smooth out any bumps along the way.

“We didn’t have the resources in the past to do that,” said West.

At its recent channel partner conference in Savannah, Ga., ERP software vendor SAP AG (NYSE: SAP) said it saw NetSuite was the only real competition for Business ByDesign, SAP’s on-demand ERP suite for the mid market that was recently launched in Canada, because unlike companies like with its on-demand CRM, only SAP and NetSuite take an ERP suite approach.

West said he’s not seeing much competition from SAP’s Business ByDesign in the marketplace so far, but he welcomes the comparison.

“It might be big in Germany but we don’t see it doing anything here,” said West. “We’ve been out there for 10, 12 years and we’re flattered they agree with our strategy and are making investments to try to catch us.”

Follow Jeff Jedras on Twitter: @JeffJedrasCDN.

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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