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This is really a follow up post to the one I did last week re: NetSuite and upon which Wayne Schultz commented:
Where do typical consulting firms make money consulting on Netsuite or any SaaS. The main answer that I seem to hear from the early firms that are in this space providing consulting is that Netsuite/etc is the tool not the end product for driving revenues.
Much of what follows depends on how your professional services business model operates. For example, if your firm relies on a split share in license fees from say a Sage or Microsoft, then you may need to adjust your thinking in some scenarios.
In the very small business space it’s all quite straightforward. You’re really trying to onboard clients to make both your lives easier. The cost savings on both sides of the fence makes the investment in minimal training (if required) worthwhile. However, you may find that your solution provider cannot offer you a split deal or if they can then it might be a lot smaller than you imagine. However, since you are primarily being used as a market channel then there should be a deal to be done. The upside is that in a deal of this kind, there is every incentive to ensure client success because you’re into a recurring revenue stream for as along as the client remains onboard.
It’s when you start thinking about servicing larger clients that life becomes interesting. The comments I made above about fee splits take on greater meaning if you are already enjoying split revenues. If you are implementing one of the more (comparatively) expensive solutions then there is every reason for you to take a piece of the action. You’ll likely be giving up revenue on hardware, network building and the like. But you have to think differently when it comes to execution.
In the usual on-premise engagement, you’d expect to be to’ing and fro’ing from client sites over a period of some weeks or months. There’s no other way to do it. It is almost certain this would not be viable in a saas/cloud deal. Neither should it be the case. In these engagements, you really should be doing as much as possible remotely. That keeps yours and the clients’ costs down while allowing you to think about operating fast turnaround – typically 3-4 weeks max. If you’ve not worked this way before then it can be alarming at first. After all, isn’t it the case that your business relies on having a business relationship that is normally conducted on a face to faced basis? Well yes – except that implementations only have a fraction of that ‘face time’ requirement. You’re doing a technical job so you can keep out the physical picture. Mostly. Video conferencing can easily fill in the gaps. In fact if you’re not already using some sort of video conferencing setup then you are missing out on a highly valuable way of avoiding travel and the cost that inevitably adds to projects of all kinds. I recommend Adobe Connect but WebEx is just about passable.
Here’s the kicker – larger saas implementations require a lot more than understanding a general ledger. You really need industry expertise in order to help clients move towards implementing best practices and processes. I’ve argued many times that practitioners have these skills – they just don’t necessarily know it. Now is the time to think this through and think about how and where you’ll start assembling teams. The likelihood is you’ll need to look outside your own walls. Equally likely, you’ll need to be a lot more proactive in bringing in business. This is where you really need to think the business model through very carefully.
On the one hand this can be an exciting opportunity for the entrepreneurial practitioner. On the other hand, you’ll almost certainly be working in a different way, juggling many high velocity balls.
Jon Reed, one of my SAP certification 5 partners (PDF download) recently prepared a podcast with Ray Tetlow (download link) of Skyytek. They’ve been implementing saas for a few years and have more than 1,000 SME implementations under their belt. The podcast runs 45 minutes so for those on a commute, it is a good way to pass the time. It is well worthwhile listening to the many nuggets Ray offers. He makes many of the points I have outlined above and expands on the skillset needed to be a successful saas consultant. He also says that with demand outstripping supply, the effective rates are higher for saas than on-prem deployments. That should be tempered against the need to ensure that these implementations happen swiftly and efficiently.
One of the things I did not hear him talk too much about is the potential for incremental revenue. Skyytek is an SAP Business ByDesign partner. For those that don’t know, BYD covers pretty much everything from accounting through HR, CRM along with a slew of other industry specific process models. Analytics is embedded into the solution and it is ICAEW certified. That means you could kick off with accounting and then move to CRM and then on to other pieces if you so wish. That keeps the project manageable while allowing the client to get used to new ‘stuff.’ Even so, expect these types of implementation to be ‘fast follow on’ because the client gets the biggest bang per buck from implementing the whole thing and not just bits and pieces. There are some interesting license issues to navigate but that for me is the best way to proceed.
If you fancy chancing your arm with NetSuite then you’re likely into a different ball game. Unlike BYD which doesn’t at this time offer customizations, NetSuite will allow customizations via a scripting system. That means you need scripting skills but the upside is you get additional revenue flows. NetSuite is typically less costly than BYD to the end user client but may not be the right fit. As always in these scenarios, you have to make a best case assessment prior to recommending a solution.
There is one more thing to add into the mix. Salesforce.com has done extremely well. It has many thousands of customers and may already be something that a potential client is using. If that’s the case then you’re almost certainly going to need to do some integration work if you are thinking NetSuite or BYD. That won’t be an issue if you’re thinking FinancialForce because that sits on the same platform as Salesforce. That’s a whole separate topic but one worth bearing in mind.
What this really boils down to is about understanding what kind of consulting business you want to have in the saas world – if at all. The answers you come up with will determine how you develop a business model.
Is that enough to whet your appetite?
Podcast: Play in new window | Download
