The awkward truth about cloud-based business models is that, like the cloud, they work best at scale.
That’s pretty much the first thing that strikes a conventional reselling business built on margins. When the margin is a couple of dollars per seat per month, you need an awful lot of seats to pay the wages. So how else do you earn money if it’s not coming from the margin?
This is the biggest issue with which small resellers struggle, says Robert Crane, a Microsoft reseller and a cloud advocate.
“A lot of resellers are still using the traditional model of selling products for the margin without any value add,” he says.
Crane has a unique perspective on resellers’ transition to cloud as one half of Cloud Business Blueprint, an online learning website that trains IT folks on cloud software.
Crane has seen the cloud remove the need for a delivery boy for the latest technology. Microsoft and Google, the two competing business software suites, sell direct to the customer, which forces the reseller into the position of awkward bridesmaid.
And now the cloud has broken apart the trusty managed services provider (MSP) model, which has become less viable in the face of a tsunami of innovation.
“You used to have an MSP who could do the lot. That’s very difficult for a small operator because they can’t cover the breadth of technology any more,” Crane says. “That’s where I think a lot of resellers are falling down. There’s still this mentality that I can do it all.”
Crane’s advice to small resellers? Specialise. Try Microsoft Sharepoint Online and Project Online, or advanced Gmail configurations.
There are experts in all sorts of programs, even classics such as Microsoft Excel. Excel experts don’t just give you a shrinkwrapped copy of Microsoft’s finest, they set up models, write macros, link to databases and carry out data analysis. All these tasks can be tied back to business processes, automation and solving business needs.
Opportunities for specialisation will keep increasing, thanks to the ability of the cloud to create highly specific, commercially valuable programs.
Take Concur, a travel and expense (T&E) management program that has been operating in Australia for just over 14 years and counts some of the largest enterprises here among its customers. This year the company has decided to target SMBs in Australia for the first time.
“We’re seeing a real acceleration of businesses moving towards the cloud,” says Concur managing director Matt Goss. He points to the success of cloud accounting companies, some of which are adding up to 300 business customers in Australia each business day, mainly through indirect sales channels. “The channel is a very effective distribution avenue.”
Concur will also be talking to financial planners and accountants who are “a natural fit” when it comes to talking expense management.
How easy is it to sell ‘T&E’ software?
Goss claims it’s an easy pitch, particularly to cash-conscious SMBs. “Expenses are one of the largest controllable spend items that a business has. Typically a business uses an Excel spreadsheet that people attach their receipts to and send to the accounting team to get approved.”
This method offers little visibility into how money is being spent. Concur adds the analytics so the expenses can be managed, which equals hard dollar savings.
Sometimes expenses only need to be recategorised rather than cut. One customer with 150 employees used the program to switch between tax reporting methods for its expenses and found it could save $13,000 a year.
Sholto Macpherson is a journalist and commentator who covers emerging technology in cloud