Channel Strategies for the CIOSan Mateo, Calif.-based NetSuite, which specializes in hosted enterprise resource planning (ERP) software, bought OpenAir and its hosted professional services automation expertise in June for about $26 million. This type of software helps consultants keep track of billable hours and expenses that are then typically billed back to customers. Professional services applications are important for value-added resellers (VARs) and integrators who want to use the apps themselves and implement them for others. Enterprise software giants Oracle and SAP AG offer their own professional services automation software.
OpenAir sold its hosted professional services direct, but that will change, according to Morris Panner, CEO of OpenAir (now a NetSuite subsidiary). Panner and NetSuite CEO Zach Nelson will outline the plan Tuesday in Boston.
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OpenAir is tiering its hosted professional services packaging with a new Team Edition for organizations with up to 25 employees. The edition will handle time and expense tracking and basic project management and will list for $49 per user per month. A higher-end Professional Edition for companies with up to 250 people will offer more sophisticated project management and list for $79 per user per month. The Enterprise Edition for large organizations working across time zones is $99 per user month.
NetSuite partners who already sell the company's hosted ERP and related services can now add these capabilities to their lineup and get the margin on net new sales as well as recurring margin, as long as the VAR is the partner of record for the account.
"They can get 30% to 50% margin on new business transactions and 30% on renewals going forward, as long as they're a partner in good standing," said Craig West, NetSuite's vice president of channel sales. The margin percentage on new sales is based on volume.
NetSuite pledges to make this an easy sale for partners contractually and programmatically. "We'll just add this to what they can sell," West said.
Dan Edwards, director of sales and marketing for Ncompass Business Solutions, which has dedicated itself to NetSuite for seven years, said this will open up a new customer segment to his company. In the past, Ncompass didn't target customers who needed this type of capability, because NetSuite wasn't strong there.
OpenAir's hosted professional services will attract defense contractors who need to meet Defense Contract Audit Agency rules, for example.
"To me, this shows NetSuite's commitment to its channel partners," Edwards said.
To be sure, there have been some bumps along that road, with partners claiming NetSuite's own services arm competes with them for business. Still, the vendor offers more margin on recurring updates and maintenance than almost all other vendors. Microsoft pays no partner margin on the bulk of its "classic" software sales. Microsoft Business Solutions does give MBS partners up to 20% margin on ERP maintenance and upgrades.