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The going out of business business model

01 May 2007

Transitioning from a break-and-fix model to providing managed services can be a daunting task and one that requires a change in mindset. However Gerald Blackie, Kaseya CEO, says the results are worth it for those prepared to put the effort in. “The whole notion to our approach is that service providers need to have the same sort of tools the large corporates have. We’ve built in all the features and functionality to allow service providers to roll out the next generation of managed services,” he says.Blackie first took this to market in 2003 and has since seen a global shift towards managed services.“There is significant profit improvement for the service provider and greater end-customer satisfaction from the services offered.”Heading up the ANZ region is Tim Dickenson, former SonicWall country manager, who noted a recurring theme when presenting a series of seminars earlier this year. “One of the surprising things I noticed is how systems integrators generate the bulk of their income from selling services on an hourly basis. That model just doesn’t work – the better you are at your job the less money you make, in fact the dollar rewards come if something goes wrong,” he says.Instead Dickenson says service providers should consider what’s in the best interest of their customers and take a pro-active approach. He says Kaseya enables service providers to charge a fixed monthly fee to clients for delivering a fixed-point, integrated solution.“Customers will see less of the service provider so the real value is in the reports they provide.”Dickenson says that feedback from service providers indicates they are very excited at the prospect of getting off the treadmill. Meanwhile Bobby Napiltonia, Salesforce.com senior vice president worldwide channels and alliances, has a similarly strong message for considering the software as a service (SaaS) model.“The channel needs to evolve or go away,” he cautions. “Commoditisation has put a real squeeze on the traditional reseller model and I see a real blending and blurring of the roles of reseller, systems integrator and value-added reseller.”Napiltonia readily admits he’s playing the role of antagonist and is out to push the buttons of the channel. “There’s absolutely no value in selling hardware and software. I’ve seen the channel go through the transition of selling hardware, then software then services and there’s absolutely no value in selling them. Now there’s SaaS and the partners who have jumped on board early are making money.”

While some analysts predict SaaS will cause major upheaval in the channel, Napiltonia says it’s just like any other service. “When you buy a mobile phone you tend to purchase from a retail store, then you get in touch with the carrier.  In a similar vein SaaS is a utility and there’s a range of different services needed to maintain that.”Salesforce.com is committed to the channel, he says, however it is selective in its choice of partner.“With SaaS the blanket approach doesn’t work as it’s a real partner conversation. As a company, Salesforce.com cares about the success of its customers through partners so it requires partners to register their deals, not to take over the deal, but to check the partner is qualified to do the work.”Napiltonia says the company’s AppExchange creates a perfect triangle for development partners to build, market and roll out their product through Appstore.

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