The Power of Controlling Your Business Data
Recurring revenue is the most valuable revenue on a company’s income statement.
SaaS companies have always known this and include a SaaS billing and subscription management application as part of their core application infrastructure stack.
Microsoft has also stipulated requirements for cloud resellers in the CSP Direct Partners program to implement similar systems.
Recurring billing and subscription management is a broad software category, but the requirements for Microsoft resellers and CSP partners are unique, particularly in terms of data management, integrations, and business process workflows.
These needs are often not met by generic SaaS billing and subscription management applications.
The Requirements for a CSP Management Application:
Recurring revenue grows as new customers are acquired and existing customers grow their usage of services.
The goal is to enable the sales and renewal motion while continuing to invoice and collect revenue.
However, this is complicated by various changes in terms, conditions, products, and pricing introduced by the provider (Microsoft). Microsoft resellers have to be able to:?
Microsoft Direct partners vary in size and sophistication.
There is no correlation between size and sophistication – larger resellers do not have more sophisticated systems.
However, there is a strong correlation between optimism around growth and the sophistication of systems!
CSP resellers can have as few as 50 customers to potentially 1000s of customers.
Cloud services have been available for more than a decade, and resellers with a handful of customers (less than 100) do not view the growth potential as an advantage because there is too much reliance on people.
Generally, MSPs have about 20% of their revenue in Azure and 80% in license sales.
In a recent survey, we found that more than 55% of direct CSPs do not offer a self-service portal.
However, we also found that one of the main drivers for implementing a CSP management system is their end-customer demanding self-service.
Then they scramble to implement and learn a new system.
Microsoft resellers who have implemented a CSP management application have a much lower operational burden from a labor standpoint – usually one or two people, whereas resellers without a system have multiple sales, finance, and licensing experts running the business.
The main factors influencing the need for labor are the control and access to the data for running a CSP business.
What Data Does a CSP Reseller and Partner Manage?
Business applications like CRM and Accounting (ERP) systems replicate records in both systems but for different purposes. Records like the Customer, Invoice, Order and Product pricing exist in both the CRM and the ERP system.
However, both systems (CRMs and ERPs) lack the ability to track and manage the type and details around the data to manage the CSP business.
The cloud data that needs to be managed ranges from 100s of records to 1000s of records.
An average Microsoft CSP reseller may have the following range of data profiles to manage:
To further complicate matters, only 30% of partners in the US sell at retail prices, while close to 95% of partners outside the US do not resell at retail.
This means various pricing strategies and discounts are applied to subscriptions.
As the scale grows, and the data management becomes a nightmare.
The ability to answer questions takes time, and, more importantly, is not readily available.
The data is siloed, and the existing systems or lack thereof are not designed to answer these questions efficiently.
This results in a significant challenge to grow and manage the business effectively, which dampens enthusiasm and capability.
That’s the power of controlling the data and developing a correlation between the sophistication of systems and the ability to scale and grow cloud resale and recurring revenue!
Who owns, controls, and manages this data?
Should sales own it, or should the finance team own it?
As mentioned earlier, this is easily understood by SaaS companies and is now very important for CSPs/MSPs.
The need is to control and manage this data, as it is customer-facing data and belongs in a CSP management application rather than locked up in an accounting system or an Excel spreadsheet.
When evaluating an application or a strategy around a CSP management system, consider these requirements:
1.???? Breadth of Integrations: Both out-of-the-box and platform-supported integrations to pull and push data from source and destination systems like different providers, accounting systems, or PSA systems
2.???? Reporting: Slice and dice data through reporting applications or native data management capabilities
3.???? Flexibility: Ability to own the entire customer experience through self-service, pricing management, contract management, and invoicing that creates flexibility for your sales team to acquire customers
4.???? Own the Data: Losing access to historical data can be expensive!
5.???? Freedom: Ability to support your choice of providers - whether you want to be direct or indirect and the ability to extend and create your own experiences for the long term.
Join me next time as I continue to share stories, strategies, and lessons learned from the trenches!
Co-founder CRO
8 个月"There is no correlation between size and sophistication....there is a strong correlation between optimism around growth and sophistication of systems."
Entrepreneur, salesman, and business consultant looking to connect and optimize businesses through process and digital transformation services.
8 个月Great stuff and outline.