Pulling Channel Partners into the Cloud

Many providers of cloud-based enterprise applications are finally able to answer the perpetual criticism that the software-as-a-service (SaaS) model does not support robust customization. Cloud-based development environments such as Salesforce.com’s Force.com and NetSuite’s SuiteCloud have matured significantly, offering things like scripting languages, user interfaces, and support for mobility. It’s reasonable to expect that these cloud-based development environments can now be used not only to customize SaaS applications but also to deliver significant extensions focused on manufacturing and other industries.

The question now is: Who’s going to develop cloud-based application extensions and customizations that support complex manufacturing-specific processes, such as product configuration, change order management, or even production scheduling?

Probably not manufacturers themselves. Manufacturers have spent the past 20 years or so dealing with the cost and hassle of customizing ERP applications and supporting those customizations. Today, most simply want to buy vertical-specific functionality off the shelf. And for the most part, vendors of on-premise ERP applications, such as SAP, Oracle, IFS, Infor, CDC Software, can accommodate them.

Nor are the SaaS application providers themselves likely to take on the task of delivering extensions required by manufacturers. SaaS vendors such as Salesforce.com and NetSuite, with their low cost-of-entry subscription pricing, are focused on mass markets. At a press event this week, NetSuite CEO Zach Nelson said his company wants to sell to the “Fortune 5 Million.” To do that, SaaS vendors must deliver broad solutions suitable for the mass market. They can’t spend time and resources digging into deep industry-specific functionality.

So, who does that leave? It leaves channel partners like resellers, independent software vendors, and system integrators. If multi-tenant SaaS applications are ever going to support complex manufacturing-centric processes, it’s the channel that’s going to deliver that support.

The problem is that resellers, system integrators, and other channel players typically haven’t been that interested in developing cloud-based solutions or creating practices around specific SaaS platforms. That’s because they can still make more money in the on-premise world, where remuneration comes mostly up front and isn’t spread out over years.

Now, however, there are signs that SaaS application vendors are reaching out to potential channel partners in a serious way. At its SuiteCloud 2010 event last week, NetSuite upgraded its development environment, making it easier for channel partners to control and distribute version changes of their software and execute phased rollouts.

That followed a move earlier this year by NetSuite to sweeten the deal for channel resellers by offering them 100% of subscription revenue for the first year when signing up new customers.

NetSuite’s efforts seem to be paying off. The company said Wipro will launch a practice around NetSuite, becoming the first significant system integrator to do so.

And NetSuite has attracted at least two manufacturing-focused ISVs: Rootstock Software, which claims to have six customers for its MRP application, developed on the SuiteCloud platform; and Iron Solutions, the maker of a cloud-based e-commerce solution for heavy equipment manufacturers.

This, to be sure, is a small beginning. But it’s good news for manufacturers who one day would like to see cloud-based applications deliver more than just sales force automation and accounting.



You can find the original post here : http://blog.managingautomation.com/channel/2010/04/pulling-channel-partners-into-the-cloud/