The new way to sell ERP in a SaaS world

San Francisco – The glory days of enterprise resource planning (ERP) systems are over says one analyst, adding in a Software as a Service (SaaS) world if partners are going to be successful they need a new go to market approach.

Speaking at NetSuite Revolution, the annual partner conference for the San Mateo, Calif.-based hosted ERP, CRM and e-commerce platform provider, Brian Sommer said the late adopters and laggards are the only companies still buying traditional licensed software. The analyst and CEO of Batavia, Ill.-based based Tech Ventive said SaaS appeals to the early majority adopters, adding that’s where partners should play.

“The traditional market is definitely in decline, its the other markets that are in ascendancy and that’s where you need to be focusing,” said Sommer.

And if you’re going to play there, he said, you’re going to need to pitch your solutions on something other than efficiency. Companies have already cut their back office expenses to the bone. If a company is going to invest in a new ERP solution or an upgrade, said Sommer, they’re going to want to see real, concrete business value.

“You can’t keep going in there and automating things that have already been automated again and again, they’re not going to buy it,” said Sommer. “You’ve got to have a compelling value proposition.”

In the Y2K era, when companies had a gun to their heads, Sommer said they had little choice but to buy. Now, however, things have changed. Spending is more discretionary, and total cost of ownership has been replaced by return on investment as the compelling driving factor.

“You need to create vertical solutions because that’s what they want,” said Sommer.

Approaches like asking a client their top three challenges, or what keeps they awake at night no longer work, said Sommer. Clients have become fatigued. Partners need to become vertical experts and know the business challenges before pitching a client. Stay away from playing the low cost game, but instead focus on speed and time to value and showing business innovation knowledge, not just technical knowledge.

“They will engage when you do the research and tell them what you see as the challenges in their business, instead of just selling the product,” said Sommer.

“They want you to convince them that you’re like the Maytag repairman. You’ll be there once in awhile if something goes wrong, but otherwise it will run reliably.”Some of NetSuite’s major competitors in the ERP space include Microsoft, Sage and SAP. Joe Santoro, founder and CEO of Toronto-based Synergy Plus Solutions, a NetSuite and Sage partner, said Sage’s AccPac software is very scaleable, is a mature product, and its technically strong on the back end. Its success, he said, has really come from its third party developer community.

“As AccPac grew-up the third-party development community wasn’t able to keep-up with the technical changes though, and that was a challenge,” said Santoro.

However, he added Sage is moving AccPac to a SaaS model and is rewriting its GUI with AJAX, which will make AccPac a real challenger to NetSuite.

Another major challenger for NetSuite with its push into the mid market is SAP. Alan Hardy, president of Tempe, Az.-based ERP Software Advisors, a NetSuite partner, said he has been successful marketing SAP Business One in specific targeted verticals, such as manufacturing.

Before he became a NetSuite partner about a year ago David McGee, president of Houston-based Scope Group, was a Microsoft Dynamics GP partner. The weak points of Dynamics, said McGee, include the fact its portal is built on another platform, which makes customization a much more challenging proposition then with NetSuite. A lot of additional technical expertise is needed to bring in expertise like CRM, and on demand capability requires Citrix terminal services.

Where Dynamics has the upper hand, said McGee, is in deals where it’s financials only, the focus is on field services or heavy manufacturing, or an empire-building IT staff is in love with all things Microsoft. Conversely, NetSuite will shine when CRM and/or e-commerce is in the deal, when the client has a limited IT staff and is open to on demand, when heavy configuration is needed, when they have a distributed workforce and when speed to implement is important.

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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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