NetSuite courts old-school VARs with new offer

Resellers will get 100 percent of a deal's value in year one and 10 percent thereafter

NetSuite is trying to energize its sales channel with a new offer that gives resellers 100 percent of a subscription deal's value in the first year and 10 percent thereafter.

The SP 100 program differs from NetSuite's existing partner program, which gives them a 50 percent split the first year and 30 percent in subsequent years, said Craig West, vice president of channel sales.

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There's nothing wrong with the on-demand ERP (enterprise resource planning) vendor's existing partner model, which on its own gives resellers "crazy amounts of margin," West said.

In fact, after four years that system would place a reseller further ahead financially than the SP 100 schedule.

But SP 100 is meant to lure in old-line resellers who are used to the big up-front revenues associated with the on-premises software and hardware market, versus the recurring income streams germane to SaaS (software as a service), West said.

It should also help customers, since those resellers could use that healthy first-year cash flow to provide discounted implementation services or other enticements, he said.

The SP 100 program is temporary and will be offered to existing partners in North America, according to West. Subscriptions must be at least two years in duration.

Overall, the announcement is "indicative of how hard it can be to woo VARs away from their current exclusive or non-exclusive deals with Microsoft, Sage, et al," 451 Group analyst China Martens said via e-mail.

The SP 100 program's focus on North America means that NetSuite is targeting Microsoft Dynamics GP users most of all, Martens said.

One NetSuite reseller gave the announcement a measured thumbs up.

While NetSuite's mainstream partner program "is great," the opportunity to choose between it and the SP 100 guidelines will provide flexibility, said Simon Whittle, chief operating officer of The AIS Group in Berkeley, California.

"We'll look at it on a deal-by-deal basis," he said.

The model is also "incredibly beneficial from a business management standpoint." For example, if a reseller needs a significant chunk of money in order to pay annual employee bonuses, that cash-flow challenge could be solved by signing deals under SP 100 terms, he said.

The new program's terms may have broad appeal in light of the economy, Whittle said. "Our industry's been hit very hard. A lot of people would take the view cash is king right now."

However, "it's going to take existing partners a little while to digest the benefits," he added. "Everyone is going to see it differently."

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