General Consultant Discussion

I posted this over on the Sage LinkedIn - so apologies if you've seen it there already: I continue to believe that to make money on cloud services the typical VAR must develop additional ""special sauce"" they are adding to the entire process. These are services that the VAR entirely controls - and bills for - without needing to sit by the mailbox waiting for a commission check, passing another 12 exams so they are ""certified"" or hoping (begging) for a pass down lead from any publisher. The CPA firm seems especially well positioned to take advantage of cloud computing since the financial services they provide are extremely complimentary. The days of customers standing back viewing ERP with the same type of wide eyed wonderment as caveman looking at fire are ending. Without changing business models the typical VAR of today is not well suited to make money on SaaS because the average ""break fix upgrade"" business model that many follow is largely replaced by new technology that removes ""grunt work"" tasks. Earning a recurring revenue stream on SaaS sales is a nice promise however I believe as we've seen with ERP those revenue streams will be reduced as the parent company needs to report fatter earnings as core market new deal sales trend down. In my view the next stage for VARS is to develop services that they control/provide which are complimentary to SaaS offerings and add value to the customer but do not rely on the goodwill of any third party to grant them a recurring commission.

The recurring commission is nice over time, but just like the developers, consultants need to recognize that the margin is different and shifts revenue from today to tomorrow. The tomorrow revenue creates greater stability in the future, but hard to compensate sales people under ""old models"" A few words of advice... Package service offerings. We sell a ""start & grow"" program with a pre-defined scope for basic implementation at a fixed price. Use a template company and take the hours out and replace it with predictability and speed. Works well with small deals and the goal is to create velocity of sales. Closed a $17k deal with 3 calls (overview demo on call 2, interactive demo on call 3) in less than 2 weeks yesterday. OR... Focus on consulting and expertise in the product and less on the product sales. The margins from SaaS are future, the today $$$ in SaaS are consulting (hours or value)

My strong belief is that just as Sage has shrunk margins so will SaaS margins. Everyone loves you and wants to ""partner"" when they need the new blood sales. When new blood sales slow then suddenly the pencil comes out and the margin is slashed. In my personal opinion anyone who shifts the model to one of assuming they will get a recurring stable commission that goes on forever is kidding themselves. The goal is to control as much of the revenue stream as possible and not rely on a third party to grant you a commission.

Amen Wayne.. I, like probably everyone else here have made a lot of money off of Sage products. I even sold a Sage client base for six-figures cash a few years back. The key words are ""in the past."" It is simply a different ball game now. This Saturday I will take and hopefully pass the third of three US Treasury Department tests on taxation that qualify me to apply for something called an Enrolled Agent (EA) designation. It is a designation that is about to get more profitible to have as restriction on just who can prepare tax returns for a fee are set to go into place in the near future and it also is one of only a very few designations that entitle its holder to actually practice before the IRS. The EA is all about US federal taxation, return preparation and representation of clients before the IRS. I mention this because this is a good example of something that most MAS resellers can transition to and not only start something new, but also very effectively leverage the skills and customer contacts that they have developed while working with MAS. It is not as widely known and respected as a CPA designation is, but it does not take near as long to obtain either. And it is recognized as being a key indicator of one's expertise in the taxation arena or the many CPA's that have made the effort to get the EA designation in addition to their CPA designation would not have done so. Trust me, the EA tests are no cake walk and that is good as it results in the designation actually meaning something. There are many other options and paths as well. The key is to get on one and get into a position where you are less dependant on Sage for income and for your future and that is what starting down the EA path is all about to me. If anyone has any questions about this designation, call or e-mail me. Wayne is right. And you really do have other options. The EA path that I have chosen is just one of many available to anyone who is smart enough to have mastered all of the knowledge that really is required to sell, implement and support ERP software well. For those of you that have a strange enjoyment for putting together puzzles...and that is essentially what the US tax code is...look at the EA program. For everyone else, find something else that you can do and enjoy and make money at. If Sage does decide it no longer needs a channel one day, you will be glad you did. 'Last thing. A while ago I mentioned that I would be very interested in getting a thread going that allowed all of us to share with each other opportunities and business models that we each discover that represent a way foward to a post-Sage business model. What I have done here is exactly what I was suggesting. If this is of interest to anyone, let me know. There are a lot of really smart people here and I think we could probably learn a lot from each other about other non-Sage options.

I wonder if this is tied into the recent decision to change Easy Pay to only a 3 year option? Easy Pay was widely successful but most clients picked 5 year options. Maybe the deferred revenue was deferred too long for Sage's bookkeeper?

@Peter, I may have what you mean by your question confused, but it your question is about why are people/resellers just now really wondering about and concerned about future revenue streams from Sage related to commissions, I would venture to guess that it is because that stream of revenue has become much more important to everyone given the changes in the market and the effects of the recession. The ""pie"" has not gotten any larger and Sage definately seems intent on keeping a lot more of it. That in my mind is the root of the problem and challenge. I am also not out to vilify Sage. Thankfully, I have other options and better uses for my time. It is what it is and the best thing that I can see to do is to spend my time not trying to get Sage to change, but rather preparing for what I view as the inevitable day when there truly is not enough net profits to be made messing in any way with Sage products to make the effort to do so worth it. The issue is not whether Sage has a 5 year option or whether it has a 3 year option. The issue is that Sage eats more of the revenue ""pie"" itself each year at the expense of the reseller who brought the client to Sage in the first place in most cases. The resellers are helping Sage build a great annuity for Sage, but doing so at little long-term advantage or benefit to the reseller. That is a problem.