This talk was given by Amon Prasad, CEO of Network Remedy at SaaS Connect 2018 in San Francisco, May 1-2, 2018. Get the slides

Why do so many SaaS vendors want to partner with an MSP?

Working with resellers in general, you probably come across the traditional reseller versus working with a company like ours; a Managed Service Provider (MSP). Everyone has their own little definition of what we typically do but I like to just have a quick explanation of what we do.

Essentially we like to become the IT department for other companies. We like to own the entire IT lifecycle–all the way from help desk to CIO level planning budgeting and everything in between.

That way the clients don’t have to hire in-house and we provide them the entire strategic lifecycle of their IT investment, everything from aligning IT with different business units, understanding the challenges that they deal with, and making IT a valuable part of their business.

We work with everything from mom-and-pop shops to 2,000 user environments in publicly traded companies and everything in between.

I sometimes feel like a hot girl at a ball because I’m consistently getting hit on by SaaS vendors trying to partner with me. — Amon Prasad, Network Remedy

SaaS vendors are consistently reaching out to us and trying to partner with us because we have the trusted relationship with our clients. We can get your products to market sooner and get in front of decision makers sooner. Our clients trust us because we’ve built that trusted relationship already.

Who do we partner with?

We are very much about relationships and not the transactions. What do I mean by this?

Traditional big reseller firms out there like CDW, SHI, and other big distributors are very transactional. The client typically needs to decide which SaaS product they want before reaching out to this reseller and say, “Hey, give me a price!”

We tend to be a much smarter company to partner with because we understand the business challenge. Unlike the big distributors, we have a much broader range of knowledge and SaaS partners that can we draw upon to select the right product for our clients.

Why is SaaS important to MSPs?

Why should we partner with SaaS companies? Why can’t we just have clients buy their SaaS directly themselves?

It creates stickiness. We’re a services firm. Our service is our product. We don’t sell widgets. We don’t sell any product.

For us, we need to get our fingers into every business unit as much as possible. We need to become that trusted company so the client has a very difficult time moving away from us.

I’m sure the SaaS companies out there like yourselves probably come through those the similar types of challenges: you want to address a business problem but you want to generate that stickiness so that you get that recurring revenue for the long-term

Why are resellers like Network Remedy important to SaaS companies?

We’re a trusted sales partner. We reduce your sales churn. We reduce the cost of hiring sales staff. We reduce all that extra marketing that you have to do to get your product in front of eyes and make that sale.

I like to call ourselves the recommendation engine for SaaS vendors. It’s in our best interest to cloudify as much as possible so we’re not managing software on site. If a SaaS vendor can solve a piece of the giant puzzle, great. If I can offload that problem and make a cut off the top–hell yeah–I’m all over that.

What do we look for when selecting a SaaS partner?

This is the real important part I think that everyone here probably wants to understand.

The client adoption is a lot faster and a lot cleaner when these things are thought through by the SaaS vendor. Those are the kinds of hurdles we avoid because it makes us look bad to our clients.

1. Is this product the right product for our client’s needs?

The highest priority for us: is this product the right product for our client’s needs? As a managed services provider my client’s needs are first and foremost.

I don’t really necessarily push a product because I’m partnered with Company A or Company B. It has to make sense for the clients need and that particular problem.

And if it doesn’t match their needs completely, is it at least customizable enough to get us there?

2. Is it difficult or complex to implement?

Being in the middle in between the SaaS vendor and the client, my team is the one that’s dealing with the nuts and bolts of the implementation process and support.

As a business owner, this is really challenging because if we select an immature SaaS partner–despite seeming amazing during the sales pitch–we end up spending a lot of resources to do QA for the SaaS vendor.

And I’m not getting paid to do QA. We’re open to helping you improve your product but we’re not going to try to QA your product.

SaaS vendors need to understand what the client really is expecting in terms of support.

If my team is doing the implementation they need to able to reach out to the right folks in your company and get that implementation done so that we can begin generating revenue and improving your product.

Going back to my original point we’re very much about relationships: with our clients and with our partners. If you’re looking to invest your dollars in the right places, invest in your support and engineering a little bit more, maybe a little bit less on your sales team. Work with partners like us to help bolster that particular sales effort.

3. Data migration from existing systems

Most of the time you’re not going to sell to a fresh clean brand-new company without existing data or information or databases.

I’m going to use an example of a SaaS partner we have called Ignite. Many of you probably have heard of them. They’re an amazing product: a cloud-based file services kind of like Box or Dropbox but for the corporate environment.

The product works great. But 90% of the deployments are for companies that have existing file systems in place.

Their migration product was terrible so we had extreme problems getting client data into the Ignite platform. My team ending up are spending a lot of time and energy getting that migration tool to work really really well.

Of course, it’s in Ignite’s best interest to get that migration tool out to all of their clients and all of their channels. We had a direct line to their support team their development team their help us develop the right tools job done.

4. Is the SaaS easy to manage?

We find SaaS vendors typically don’t necessarily think about how their channel partners can manage multiple clients in one single pane of glass. A really slick management portal to add and remove seats, scale up and down, and so on would really go a long way to making partnering with you more attractive.

For example, Microsoft Office 365’s platform has a really nice admin login where we can see every client that we manage. We can manage all their all their solutions without having to log into a different dashboard every time.

Another good example is Cisco Meraki. We can manage a lot of firewalls, switches, Wi-Fi, etc. for all of our clients in one single pane of glass.

5. Is the SaaS company viable?

Obviously, if you’re a startup or if you’re in your infancy, we’re going to make a distinct choice on whether or not this makes sense for our clients.

I would hate to deploy a SaaS solution in a thousand user environment that is a publicly traded, billion-dollar company when all of a sudden the SaaS provider goes out of business because they ran out of VC funds.

It’s all well and good if you have an amazing product, but in the real world when we go to deploy it, we want to make sure that your product is going to stick around. We want to know it’s going to be there as we grow the seat counts and revenue with the SaaS vendor.

6. Does the SaaS company have reference customers?

We lead a lot of times with references. Do you have a fairly well-known, marquee client that you can bring to the table to get us excited? Are they willing to be our reference? Knowing a big firm trusts your product really goes a long way to helping us make the choice to partner with you.

Answer the question, “Why should we trust all of our client’s important data and IT infrastructure with you?” In response, say this fairly large and well-known company chose to work with you. Say they’ve been working with you for 5 years. Introduce the key person to talk to. Offer to talk to that person yourself to see how you’re doing.

7. What’s in it for me, your partner?

I mean for, yes, it’s got to be a great product for our client. But I’d love to get some incentive if we’re going to be your sales team. Make it worthwhile for us to go out there and sell on your behalf. Ultimately, we’re investing time and energy and money to partner with any of our SaaS vendors out there.

I understand it’s margins. If you’re selling at four dollars a seat, we don’t necessarily need 50% of it but a 25% margin would be nice because we’re doing a bunch of the work for you.

As we scale the seat count or the volume count for your product, we’re all winning.

Questions & Answers

Q: What percentage of SaaS vendors are you a true reseller of so it ends up being on your paper versus how many are referral partners? Are there some SaaS vendors where you only get the services revenue?

As a percentage, it’s hard to say. I’d say 50/50 to be honest in terms of our own paper or having it as a kickback.

Many times we’ve negotiated if we can purchase the SaaS on a heavily discounted amount or significantly discounted amount to put it on our paper. We still own the client relationship and we can mark it up to whatever we like.

We don’t like to be capped in terms of “Here’s the fixed price and you’re going get below 10% at the end of each quarter” or whatever it is. We know what the clients are willing to pay for this particular solution because we’re going to do the heavy lifting in the sales side of things.

On the other hand, Microsoft has a direct ACH deposit every quarter. For every new seat, every new license, every new upgrade, every new client that you bring on board, they kick us cash in the back. There’s no need for me to run it through our paper at all.

Other companies that are smaller don’t necessarily have that whole infrastructure built already. They’re much more aggressive. they’ll say, “Hey I’ll give it to you at a 50% discount. You mark it up to whatever you like.” We can add our own flavor of management on top of it. We can add our own branding or whatever to create stickiness for us.

Q: What’s the training you expect from your SaaS vendor?

When we own the client relationship, we end up being the first line of defense for any and all IT issues whether it’s a SaaS vendor or whether it’s your local PC or whether it’s something some server parked in their IT room.

If we can be that first line of support for you with some basic training, we can do that absolutely. That’s the value we bring to you.

I don’t have an expectation of having my team trained in the nuts and bolts of your product at All. What I really want is a direct line of communication to a solid support team on your end.

I don’t like hearing, “Oh, we’re not open on weekends. Shoot us an email we’ll come back to you on Monday!”

As most IT work happens after hours when people are not using their systems, we’re the ones doing all the heavy lifting to do upgrades, updates, and fix damage.

At least have a direct line of communication. Maybe you don’t have the resources to have a 24 by 7 help desk yet. At least if we can reach a couple of good resources on your team if and when we need them, it counts for a whole lot when selecting a partner to work with.

Obviously, at some point, our knowledge is not going to be enough. We will have to have direct contact to talk to some engineering folks very quickly.

Q: What are the the the cloud SaaS applications coming out that you really want to take to market to your customer base?

We like to push for business continuity. This is something that many companies don’t necessarily think about because they think they already have backups.

They don’t really think about the fact that if there’s a disaster it’s going take at least a week to buy new hardware; and maybe a few extra days to figure out where to put all that hardware. We need to get internet service. We need to get everything rebuilt and then restore from the cloud.

You’re looking at two weeks of downtime. Most companies go out of business in two weeks.

The push is to cloudify as much as possible in a cohesive fashion, then build and implement the business continuity so that they can be up and running within hours and not days or weeks. For instance, failover sites for AWS or Azure. Or cloudifying critical business functions, such as pushing up email hosted in-house to GSuite or Office 365.

Now if something happens in your office building, you can sit in Starbucks and still be connected to your resources, your billing platform, or your database.

Educating our clients on this and then implementing SaaS solutions really make sense for us.

Q: What would you say is your typical launch time after signing on as a SaaS reseller before expecting to actually close a sale?

To be quite honest, probably close to 9 months to a year before we’re actually successfully generating revenue and rolling your product out consistently at all of our clients (or wherever the need is).

We get bombarded by SaaS vendors saying, “Hey, do you want to partner? We’ve got this new cool product for B2B and B2C and…” every acronym they can think of. We have to cut through that chatter and really understand the product. That takes about 3 months.

Then it takes 2-3 months for us to understand the product. I run it by my team because they are in the weeds a lot more than I am. They can tell us if this is a valuable product we need. Only after that, we will make the decision to sign an agreement.

Then there’s a training component, which is another 3-month minimum.

Finally, we need a pilot at some of the smaller companies we serve to familiarize ourselves with the product.

Q: How does the amount of training you’d need to do on-site with your client play into your decision making process? e.g. an SAP installation may require heavy end-user training

Absolutely we would love to have end-user training resources available to us. I understand most SaaS companies are a startup without all those resources available, but if you can help us train our end users, we’re happy to allocate a resource on our side to learn from the initial training sessions and then we can go pick up and go from there.

We’ve done this several times over, Ignite being a perfect case in point they’ve done plenty of training with my team. Now every time we deploy Ignite, my team does the training.

That burden is off of Ignite’s hand.

If it’s an SAP or Oracle or Salesforce deploying that is very intricate and complete, we would love to have training resources available to us. We’re not just a reseller we are a reseller partner and we expect that same partnership to function both directions.

And of course, we’re selling your product out in the market as the trained partner that you can trust to handle a lot of tier 1 calls. We would hope that when the time comes that you sell 1,000 seats to some new company, and they say, “Well, great, this is awesome. Who is going to implement this? And who is going to support this after it’s done?” you refer them to us as your trusted partner.

Scratch my back, I scratch yours.

I don’t like to jump between competitors because we invest a lot of time and energy in understanding a product. Plus, our clients expect some level of stability and product transparency. If we’re jumping and throwing stuff at them, it doesn’t generate a lot of trust between them and us.

Q: Do I have to pay resellers an evergreen commission or just pay them for the first sale or up to a year?

It depends on the implementation of the solution. If it’s purely just us making a recommendation and a warm introduction, then we can pick up a quick upfront piece. But all of the implementation all the support needs to go through directly to the SaaS vendor.

The problem here for companies like us lies in the fact that we’re the first line of defense in the IT realm so anything touching IT comes to our team right now. We like that because again creates that stickiness for us.

We like a more long-term partnership relationship rather than just a quick one-night-stand.