VAR Partnerships

Many accounting resellers are forming partnerships as a strategy to win new business.

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Many accounting resellers are realizing they can't go it alone. The fewer, but bigger, accounting software vendors have large and more technologically sophisticated lines that have broadened beyond accounting into areas such as customer relationship management. Even a company as large and successful as Laguna Hills, Calif.-based Blytheco, Sage Software's top VAR for each of the last three years, turns to other organizations to meet the needs of its customers.

"Partnerships are developing as the industry consolidates. Once a reseller puts their toes in the water on a single transaction, it's a natural evolution to work together more often. In the future, some partnerships may even turn into mergers," says Stephen Blythe, president of Blytheco.

Making the Relationship Work

Partner Insights

Successful partnering doesn't just happen; it takes plenty of work and a process, according to Jon Donlan.
"Partnering has always been a touchy subject-it's like a fox in the hen house. Many companies are afraid to bring in partners because they'll steal business," says Donlan, vice president of business development for Great Plains reseller Software Sources, a Hingham, Mass.-based company that focuses on the manufacturing market.
"We're not a predator. We had a partner's customer call us directly because they wanted to switch all their business to us, but we wouldn't do it. People know our reputation, and know we only focus on manufacturing," adds Donlan.
Mark Dresser, president of Scarborough, Maine-based Dresser & Associates, specializes in Sage Software's Abra HRMS product line. At least half of the firm's deals involved working with another channel organization, and at any given time he's working with approximately five partners.
"The key to making it work is to stay in touch with all partners on a regular basis. We call each partner a couple times per month," says Dresser. "We also run seminars to keep the relationships going. It's easy for partners to find Abra work for me. I have to work to find opportunities for MAS 90/200/500 product line dealers."
Stephen Blythe, president of Blytheco, MAS 90 reseller based in Laguna Hills, has more than 50 active partnerships.
"There are partnerships that work and ones that don't," says Blythe. To make these relationships work, you must include top-level management, and have an exclusive agreement to work together. They must also trust each other, and jointly support clients."
Irvine, Calif.-based Sage Software partner Spinnaker often partners with Blytheco and focuses on Sage's CRM product, SalesLogix. President Mitch Cannady says, "Firms have to choose partners for the right reason, and personalities have to fit." He provides these eight tips to help make partnering relationships work:
l Choose the top partners in that field.
*l Ensure a strong company culture fit between partners.
* Discuss with the publisher who they recommend to be a good fit.
* Attend partner events.
*Be aware of overlaps in service or product offerings.
*Define the relationship prior to engagements.
*Review communication strategies that involve both the partners and the customer.
l Keep the customer in mind at all times.
(How does the customer benefit from the partnership?)

To look at it another way, Rob Johnson, director of partner programs for Irvine, Calif.-based Sage Software, says flatly that, "The partner strategy to be all things to all customers isn't working."

He also has no doubt that when firms get together, it can produce significant results. "Our more profitable partners focus on a specific industry, and offer core competencies while teaming up with other partners to offer a complete solution,"

Johnson says, "Partnering allows firms to work together to drive down total cost, enhance quality, and improve service, while maintaining or increasing profitability."

Blytheco, with $7 million in revenue for 2004, has been one of Sage's largest resellers and has been expanding nationally. Even though Blytheco is authorized to sell SalesLogix, Sage's higher-end CRM package, it works with Spinnaker, a CRM specialist based in Irvine, Calif.

When the two companies work together on an installation, "We get something we want and they get something they want. In most cases, we bring in other resellers to help us with a particular product," says Blythe.

Over the years, the two resellers have worked together with more than ten customers and 20 prospects. Spinnaker focuses on Sage's SalesLogix, while Blytheco concentrates on the MAS and Abra product lines.

The resellers are currently involved on a joint engagement for Park West Landscape, a Blytheco customer for 15 years. Park West started with Blytheco as a $10 million business when it first began using MAS 90. It has grown to $130 million in annual revenue and needs systems to handle its increased needs. Park West, which wanted to transition to MAS 500, needed an HR and a CRM system.

"Although we're authorized in SalesLogix, we find CRM a different process and we did not grow it internally. Partnering is more logical," says Blythe.

He turned to Spinnaker for the CRM design, implementation, and training. Blytheco will handle the Abra HRMS and MAS 500 implementations in an engagement that is expected to take six to nine months. Right now, the resellers are in the definition phase of the engagement for SalesLogix and Abra, and Blytheco will start the MAS-90-to-MAS-500 conversion in September.

Communication is a key to making joint engagements successful, notes Mitch Cannady, president of Spinnaker.

"We have always worked well together because of solid communication and advanced planning for customer engagements. We also always provide one face to the customer," he says.

The relationship is extremely important in generating new business for both firms.

Sexauer: Going It Alone

Rick Sexauer approaches partnering in a unique way. He has no choice: Sexauer is the only employee of Fremont, Calif.-based Avayle Solutions, an Epicor software reseller.

Avayle is a virtual company. "The virtual organization allows me to provide a variety of services to our customers," says Sexauer.

The systems works well-Epicor named Avayle as its American VAR of the Year, Enterprise Solutions Group. Sales are also good for a one-person shop. The company, formed in 2004, had revenue of about $330,000 from March through December.

Avayle sells and supports Epicor's Enterprise Suite, which includes the financial suite, project suite, and CRM, while also handling Epicor's manufacturing lines, Vantage and Vista, with a focus on make-to-order/mixed-mode manufacturers.

Sexauer handles sales and marketing, while utilizing Epicor Authorized Consultants to implement the packages. Two of the firms working with Sexauer specialize in manufacturing products, the others in Epicor's Enterprise suite.

Sexauer feels partnering helps with capital conservation, specialized knowledge requirements, and, most important, customer satisfaction.

"By partnering, I'm able to leverage a rich talent pool of individuals who have deep expertise in specific areas," he says. "There are too many features and technologies at play in a single implementation where one individual can know all aspects.

The arrangement also makes Avayle more profitable than it would be with employees. "Because the partner is not an employee, I can actually manage my own gross margin more effectively," he adds. "I do not have the burden of carrying the payroll costs for an individual that may not have enough work based on their skill sets."

The approach buoys Avayle's reputation, and, as a result, brings in additional business through references and recommendations, Sexauer says. "I would estimate that this approach contributes an estimated 20 percent of incremental revenue to the bottom line by allowing us to deliver components that we may not have the specific expertise in," he adds.

Avayle acts as a central point of contact for customers. It also handles billing and collections, paying the consultants, who act as subcontractors, on a net-30 basis. Sexauer usually pays other consultants 70 percent of the billings.

A new relationship with a firm that offers accounting and part-time CFO services is seen as providing referrals for new software sales. "If we close a deal as a result of their relationship, they will earn an incentive. We will be expecting the same for revenue that we bring to them. We are working out the details currently on this. The reason we are adding this is that we find many opportunities where an organization has lost key accounting people and needs either a part-time or full-time replacement. This service fills that gap," adds Sexauer.

About 40 percent of Spinnaker's new leads come from partners, while 30 percent of Blythe's new engagements involve some form of partnering

Although neither firm is comfortable discussing how the revenue is split for this particular engagement, Blythe says, "When we bring the deal to the table and the other firm is helping us, we often work with an 80/20 split."

Vendor Offerings

Both Sage Software and Fargo, N.D.-based Microsoft Business Solutions offer tools to help partners foster partnering relationships.

"At Microsoft, we can better meet the needs of our customers in more geographies and in more verticals by promoting connections among our partners," says Craig McCollum, vice president of sales strategy.

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