VARs could get wiped out by the cloud

The traditional IT channel should be worried about the effect cloud computing will have on their revenue streams going forward, software-as-a-service (SaaS) vendor, NetSuite, claims.

During a press briefing in Sydney, NetSuite global CEO, Zach Nelson, claimed the cloud computing model would fundamentally change how IT providers related to customers and predicted traditional VARs wouldn’t survive unless they reinvented their organisations on consultative, business lines.

“It’s not about managing applications anymore,” Nelson advised channel partners. “Traditionally, VARs have made their money by managing and driving applications, but now a lot of that business has been built into the applications themselves.

“There is an opportunity however, for the channel if they shift their business to a recurring revenue model… they also need to become experts in their customer’s business and running the company. That’s where the value is – there’s no choice but to be a business partner.”

NetSuite provides CRM and ERP platform-as-a-service infrastructure which allows partners and customers to build customised, Web-based applications for specific industry verticals and businesses. The company targets the small business and mid-market segments and has found particular success in the wholesale, IT and logistics markets. It has 400 customers in Australia.

In a bid to build its partner relationships, NetSuite brought on its first channel manager for Asia-Pacific, Ken Bartlett, this month. He is based in Brisbane. Asia-Pacific managing director, Chris Schafer, said NetSuite was also aggressively targeting select partners across the region and was in discussions with nine locally in Sydney, Melbourne, Brisbane and Adelaide. The partner mix is split between ISVs as well as VARs. NetSuite provides resellers with 30 points for every customer that signs up, along with 30 points on all renewals.

The company is also running a seminar to discuss the cloud for customers and partners in Sydney on October 20.

According to Nelson, cloud computing adoption has accelerated in the past year as a result of cost considerations and the global financial crisis, along with advances in post-Internet software design. But while recognising the importance of a channel in broadening its reach, Nelson admitted NetSuite had no set strategy for how it would split direct versus indirect business.

“We are looking at segmenting off pieces [of business] – if a partner has vertical expertise, we will push leads to them,” he said. “And if a partner finds business and registers a deal they will keep it forever.”

In September, the vendor announced a native application to support users accessing its solution via the Apple iPhone and iTouch.

Got a news tip or feedback for ARN? Email the editor: nadia_cameron@idg.com.au.

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