SmartBear boasts more pricing flexibility than software testing alternatives

Software testing and quality assurance software vendor SmartBear Software is looking to build its channel capacity and has targeted Canada for growth, offering a software suite it says offers partners greater margin flexibility and more competitive pricing than competitors such as Hewlett-Packard Co. and IBM Corp.

The American company began in 1999 as Automated QA Corp. It was acquired in 2007 by an investment group led by current SmartBear president Derek Langone, who merged them with Smart Bear Software. A year later, they were merged with Pragmatic Software.

Langone said this led to three fairly siloed operations operating under one umbrella. Last month, all three firms were formally merged under the SmartBear brand, with consolidated marketing and back office functions and one cohesive go-to-market.

The company has three primary product offerings. It offers quality assurance tools for software quality assurance, developer testing and performance profiling, developer-oriented tools for peer code review, and tools for managing the software development lifecycle. Langone said they continue to offer the software as point solutions, rather than a suite, so users can choose the pieces that are right for them.

The development and test management is offered in a hosted model, but the others are offered solely as on-premise solutions, although SaaS versions are in development.

“Customer demand has just really started to gel (for SaaS),” said Langone. “They reason it’s not already offered in a hosted model is, generally, security concerns. With a hosted model companies would have to move source-code off site.”

This likely wouldn’t concern smaller companies, said Langone, but it’s a deal-breaker for some of SmartBear’s larger customers, which is why it will offer the choice of on-premise or SaaS.

Today, SmartBear’s business is a mix of direct and indirect, with about 30 per cent of its business coming through the channel. However, Langone said the channel is where SmartBear is investing most of its resources, looking to recruit partners, build capacity and drive greater than 50 per cent of its revenue through the channel.

And Canada will be a part of that push. Langone said they’ve signed Softchoice Corp. and a handful of other Canadian resellers recently, and two of their 14 inside direct sales representatives are focused on the Canadian market and supporting Canadian partners.

When pitching potential partners, Langone said SmartBear offers three key advantages. Its products cost “a fraction” of their more established competitors such as HP and IBM, allowing partners to be more competitive on price when competing for business. Second, with SmartBear just beginning to build-out its channel capacity partners won’t be butting-heads with fellow Smart Bear partners too often in the marketplace. And third, he said SmartBear has designed its partner program to mitigate direct/indirect conflict. The indirect sales team works with the partner to close deals together and both get their margin/commission.

SmartBear offers complementary online training and certification that gets a partner up and running within one week, as well as ongoing sales and technical training through a secure partner portal. The program includes a deal registration program that, if another SmartBear partner sells a deal that another partner originally registered, sees both partners eligible to receive the full commission.

Partners start-off with a 20 per cent margin, moving to 25 per cent after $100,000 in sales and 30 per cent after $200,000. Langone added those are perpetual levels, not annual. The software is sold on a perpetual license that includes maintenance for the first year, with annual renewals for maintenance, support and upgrades.

“Canada is typically our third or fourth-best region in revenue each month,” said Langone. “We have a nice footprint of investment.”

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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