Open Systems Casts a Wider Net

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Open Systems has its hands full when it comes to finding the right place for each of its partners. In the last few months, the Shakopee, Minn.-based company has announced six new elements to its reseller program. Although the company has been in the mid-market accounting software business since 1976, it saw the need to provide partners with new and improved initiatives. Open Systems hopes this restructuring works better than its last attempt. In 2001, it had a goal of increasing the reseller channel by 20 percent, but failed to meet that mark. In fact, the number of partners has stayed the same. However, Paul Lundquist, vice president of sales, says there is a strong interest in the new programs. When the programs were rolled out to existing partners and prospects in July, Open Systems offered a conference call explaining the programs and their benefits to 40 interested prospects.

The company has also ramped up its staff for the channel programs. In December, it hired Rita Strauss as director of business development. Strauss, who had worked with channel programs at Red Wing, Accpac, and NetSuite, was given the job of recruiting resellers. Strauss quickly brought on board another Red Wing alum, Troy Kemmerer, as channel development manager. Other staff members have also been given new duties to help Strauss' unit. These include three consulting service staffers who assist in pre-sales activity by demonstrating software to potential customers. They can also assist in implementation planning and modification analysis.

Open Systems Snapshot

HQ: Shakopee, Minn.
Phone: (800) 328-2276
Web: www.osas.com
Founded: 1976
Products: Open Systems Accounting Software and Traverse.

The effort is now split into three non-selling and three selling programs. Prior to this, Open Systems had three channel programs, including a authorized reseller, a consultant, and the independent service vendor programs.

Partner Insights

The selling programs were revamped for partners that want to offer full-service installation and training to their customers directly. Categories include Traverse Enterprise Edition, Traverse Business Edition, and Open Systems Accounting Software.

The referral and recommendation programs were implemented to attract more accountants who want to support their clients, but who do not want to be involved in the actual sale. Open Systems had CPAs involved in its programs, but had not tracked their numbers.

"We understand the importance of our relationship with the CPA community, and we feel we're offering them low-risk, attractive incentives for a high-support relationship," adds Lundquist.

Under the non-selling partnership programs, accountants have the opportunity to choose from three levels of participation: Consultants, Referral, and Business Analyst Programs.

VARs can get access to programs tailored for those selling systems on the different platforms Open Systems supports. These include Windows, Linux, and Unix, and, with the most recent version of OSAS, the Apple Macintosh.

Open Systems offers two main product lines, the source-code product, OSAS, and the Windows-based Traverse. Open Systems also touts its open source code and encourages the development of third-party applications that integrate with both product lines.

Keeping the Resellers Happy

The fee and margin structure has also undergone major changes, with resellers now invoiced monthly instead of paying an annual fee. Previously, VARs paid a flat fee of $995 for each product they sold. Now, resellers pay $200 per month for each product. They also receive training, unlimited tech support, and marketing support for free. Participants also receive a copy of the software, conference registration for one attendee, and access to eVAR, the reseller-only section of the Open Systems Web site.

About 70 percent of VARs sell both Traverse and OSAS, 20 percent Traverse only; and 10 percent OSAS only.

Existing resellers can continue to pay the fee annually, but they remain at the lowest margin of 35 percent. "Most of the resellers who choose to do this have one or two clients using Open Systems and don't have a ton of business. However, we didn't want to tell them to go away. So, we came up with a way to make them happy," adds Lundquist.

Meanwhile, for those paying the monthly fees, margins have been established as follows:

* Premier Level Partners receive a 55 percent margin for purchasing more than $50,000 in software per year.

* Executive Level Partners receive a 50 percent margin for purchasing $25,000 to $50,000 in software per year.

* Partner Level Partners receive a 45 percent margin and purchase $10,000 to $25,000 in software per year.

* Associate Level Partners receive a 35 percent margin and for purchases of less than $10,000 in software per year.

Mark Johnson, president of Bridgeton, Mo.-based Analytical Systems, has been an Open Systems reseller since 1984. With the new program, he feels the free training is a key attraction.

"This is a big issue for us. We need to consistently educate ourselves because technology is moving so fast. It's hard to keep up, but with Open Systems providing the training it will be easier," says Johnson.

Johnson, who opted for the monthly fee payment, says it is less expensive than paying for the components, such as training and tech support, which were separately priced under the old system.

"The monthly payment plan makes it easier from a cash flow point of view. Additionally, sometimes the VAR feels like he/she is being charged every time you turn around," he says. "This makes it very nice in that I have one monthly payment and everything is included."

Analy-Sys serves clients in the distribution market, including those in light manufacturing and assembly. The typical end user has annual sales ranging from $4 million to $20 million. An average low-end Open Systems engagement runs about $3,000 for software and $4,500 in services, while a high-end engagement runs about $25,000 for software and $40,000 for services.

Johnson also says the company executives are accessible and actively help out the reselling efforts.

"If we have a prospect we're having trouble converting into a client, both Paul Lundquist and [CEO] Michael Bertini, come in to help. It's a comfort knowing we have this type of support," he adds.

Linda Lester, president of Bal-Tech, a Vernon Hills, Mich.-based reseller, says that it was easy to make the choice to sign up for the new program,

"For an active VAR that supports both Open Systems product lines and sends at least one person to the annual conference, it's a slam-dunk decision," says Lester. The new program will save her firm at least $227 a year, perhaps more, depending on how many training classes the firm uses. Lester also likes the fact that VARs can get 5 percentage points more margin under the new program.

Supporting Relationships

The consultants and referral programs are designed to bring CPAs and other accounting professionals into the fold so that they can understand the needs of clients using Open Systems' products.

"The goal of the non-selling programs is to give CPAs traditionally doing tax and audit work, a stake in their customers' technology business," says Lundquist.

Those in the Consultant and Referral programs can assume roles ranging from acting as project manager, performing needs analysis, setting up charts of accounts, or training and/or supporting client personnel. Participants receive a commission of up to 10 percent from registered leads that close within a six-month period. Those signing up each receive a single-user system, Internet training at discounted prices, and access to eVAR.

Consultants pay $695 per year to join, while the annual price is $495 for referral partners.

The Business Analyst program enables accountants and others to evaluate the software at no cost and demonstrate it to their clients. "From there they can confidently refer clients to Open Systems or a reseller. Plus, with this program we hope many partners will move up to the Consultant or Reseller programs," adds Lundquist.

Carly Lombardo is Associate Editor of Accounting Technology and can be reached at carly.bohach@thomsonmedia.com.

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