CRM in the cloud

VARs hoping for continued success with CRM need to rethink, says John Paterson

Cloud software is fast becoming a commodity offering. Prices will shift ever lower and as vendors wake up to the chance to deliver simple, easy-to-use ‘freemium' products, the opportunities for VARs will quite simply vanish.

Resellers have already struggled to adapt to the new financial model, with big up-front payments being replaced by small, monthly fees.

The saving grace has been the decision by vendors to move their complex on-premise solutions into the cloud: VARs have still had access to consulting and support revenues.

But this is not sustainable. In what is fast becoming a commodity marketplace for SME applications, these products are simple and easy to install and configure. There is no consulting fee, training requirement or support contract.

Where is the margin for a VAR selling a cheap product on a monthly subscription, with no requirement for added value services?

There is no future for CRM VARs based on today's business model.

But there are other options. While technical skills are no longer required by SMEs investing in subscription-based CRM systems, business skills can be invaluable. And there are new entrants into the market, such as marketing companies which run lead generation campaigns and which can see the value of adding a CRM system to their existing services portfolio.

VARS can attempt to move up market and work with far more complex product sets – if they can afford the investment required to gain market traction and attain new skills.

Or they can change focus and use their existing skills to advise organisations on how best to use the CRM product, from improving the sales process to measuring responses and improving mailshots. The resellers that proactively make this move and accept the death of the traditional VAR model will have a greater chance of staying in business.

John Paterson is chief executive officer at Really Simple Systems