As many customers shift to the Software as a Service (SaaS) deployment model, smart solution providers are looking at ways to parlay their own value-added services and support offerings to vendor-hosted infrastructure.
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Case in point: Bluewolf, a longtime Salesforce.com partner based in New York City, launched a SaaS support program this week that will cover all of a customer's Salesforce.com-hosted applications -- whether they were developed in-house, by Bluewolf itself or by third parties.
Bluewolf's SaaS Support program, dubbed Open Support, aims to provide on-demand support and maintenance when a customer calls for help, as well as proactive planning and services to stop problems before they begin, the company said.
"What's driving this is that a lot of our customers try to support the application on their own," said Lou Fox, chief technology officer of Bluewolf. "And it's an application, just like Oracle apps are applications -- it needs to change and alter with the company. Their processes change, and it also needs to keep up with Salesforce.com updates."
It's expensive for customers to field on-staff administrators who stay up to date on the quarterly Salesforce.com updates, plus the niceties of the company's own application work. Fox said the average tenure for a trained Salesforce.com admin is about nine months, so turnover is an issue.
Pricing for the SaaS support program will vary with the complexity of the applications.
"If they have a lot of stuff going on from different parties, it'll get more expensive," Fox said.
As Salesforce.com evolved from a straightforward hosted sales force automation (SFA) and customer relationship management (CRM) application to more of a platform for diverse application development, the complexities have grown as well. Customers are using the company's Apex language, Force.com development environment and VisualForce user interface building tools to build applications that have nothing to do with CRM.
One hidden problem with Salesforce.com and other on-demand apps with intuitive user interfaces is that making changes on the surface is easy. But those changes ripple throughout the deployment and can cause big problems.
"We have to educate people on the support side, because Salesforce.com is so easy to alter and play with that a lot of companies take it on themselves," Fox said.
The result of that can actually force the company to redeploy Salesforce.com -- hardly the most productive use of their time and money.
"Our services will prevent that," Fox said.
Fox estimates that Bluewolf, with a headcount of about 150, has done close to 2,000 Salesforce.com implementations over the past seven or eight years.
SaaS support programs proliferate along with the model
This push toward SaaS support and service models is not limited to Salesforce.com.
The issue of support and services provided by value-added resellers (VARs) is important in the SaaS transition, where traditional resellers feel threatened as vendors use their hosting prowess to forge tighter ties with the customer. If the application is hosted by the vendor and billed directly to the customer, these VARs fear a loss of account control. But they still have an ace in the hole: Whether an application is deployed on-premise or from a vendor's server farm, it still needs to be implemented, customized and supported.
That is something VARs need to reinforce with customers, said Mike Rogers, director of business development for Customer Effective, a Greenville, S.C., partner specializing in Microsoft Dynamics CRM implementations and support.
"Customers have a mentality of wanting one throat to choke," Rogers said. "They want to talk to one person for their support, and maybe that person then has to go to many other people for the answer."
Even vendors as large as Microsoft and Oracle don't have the bandwidth to handle each implementation snafu, resellers and integrators say. And the fact that user-friendly software can be a world of hurt for the IT professionals trying to support it can help VARs maintain their customer relationships.
"The flexibility of these solutions, whether it's Microsoft CRM or Salesforce.com, is that even an educated power user can really get a project in trouble," Rogers said. "We struggle with this every day."
Customer Effective has a deluxe support contract with Microsoft, so it can log a support ticket for the customer if it can't resolve the issue itself. Its advantage over the vendor is its deep knowledge of the customers' business and systems.
"Our consultants are in the trenches with the client and help with enhancements, but also in terms of pure support, we have the backup of Microsoft," Rogers said.
He said that, to date, Microsoft has had a better partner story than Salesforce.com, which typically gives a referring VAR a one-time 10% fee for referring new customers but otherwise has a direct-sales focus. Microsoft built its business with partners, but it now has its own self-hosted Microsoft Dynamics CRM Online and may face the same partner concerns, Rogers said.
Mick Gallagher, managing partner with LST, a Fallbrook, Calif., Oracle and NetSuite partner, said VARs must dip deeper into the value-added services and support trough to stay profitable. He estimated that 40% of LST's revenue comes from sales of software licenses, with the mix shifting more toward services every year.
"That service business absolutely will grow," he said. "We started in license-only sales, and that has morphed into services and managed services, and now we have a hosting business as well."
And regardless of deployment methods, he said the trick to maintaining margins is to stay ahead of the commoditization curve and make sure personnel are trained in the latest and greatest technologies. The going rate for custom work in databases is $100 to $150 an hour, and that rate is sinking as database expertise becomes common. Similar custom work in the various Oracle applications, by way of contrast, can be $180 an hour. And for an Oracle partner working in some of the company's newer and more "exotic" application areas -- such as Demantra -- the rate could be $250 an hour.