Can Acumatica's channel strategy work for mid-market SaaS?
- Summary:
- Acumatica's channel strategy as a growth driver faces plenty of challenges. Will it work? The CEO is confident.
[sws_grey_box box_size="690"]SUMMARY: Acumatica wants to play the innovation card with the partner channel. There are plenty of challenges ahead so will it work? The CEO is confident.[/sws_grey_box]
The other week, Jon Reed met with Acumatica executives and partners at its annual partner get together. At the time he noted that most of the company's challenges are around how the company is able to stimulate the partner channel but pointed to a solid solution for a market that so far has not been well served or which has seen vendors exit in favor of chasing down larger company budgets.
That sentiment was repeated in a discussion Reed had with Brian Sommer (video in production) where Sommer argued that Acumatica faces growing pains as it enters a form of vendor 'teenage' period, where spurts of growth occur alongside a level of oddity that can appear confusing.
In a video recorded conversation with CEO Jon Roskill though (below), I saw the confidence of a person who has 20 plus years of Microsoft experience under his belt. The importance of this fact should not be underestimated. For years, Microsoft set something of a standard for playing well with application software partners through which it profited. However, as Roskill notes, Microsoft is slowly exiting from thats strategy, preferring instead to go direct with AX - or Axapta in old language - a much more powerful offering than the GP and NAV offerings that are still on the books but are being de-emphasized.
My view is that Acumatica, along with others like Plex, have a great opportunity to benefit at a time when there is a clear ERP refresh cycle in the wind. We have already seen this in the small business market where upstarts like Xero have grown like topsy while their much larger rivals like Sage have lost ground. If what I am seeing on the ground in various forms is correct then that part of the market is fast approaching a tipping point. Whether it is solid case studies, published results or the wave of professional accounting types recognizing the need for change, the smaller end of the market is on board with SaaS.
At the top end of the market, Workday and Salesforce.com continue to dominate the conversations and headlines. And while Salesforce.com looks like the juggernaut to beat in CRM, Workday is revving hard to make financials as eye catching as its HR solutions. It may be a few years before this segment of the market can properly be said to have reached a tipping point but the direction is equally clear.
That only leaves the mid-market and here, NetSuite has done well but doesn't yet have the scale to be considered a world leader in the overall mid-market enterprise applications space. That's still SAP and Microsoft's turf. The mid-market is also the slowest to move. That's largely because those businesses are often constrained by two factors:
- As smaller businesses than their mega-business cousins, they rarely have the economic scale or technical skills to make a change in systems seem worthwhile unless there is a compelling reason to do so.
- Where the channel is involved, that has to be brought on side. Sommer's US based observations imply these channel players are often lifestyle businesses or are of an 'older' mindset. The same is true in the UK where there has been significant resistance to change. To make matters a bit more complicated, there really hasn't been much by way of channel action of note beyond the larger accounting based consultancies like Baker Tilly and McGladrey.
In the video, Roskill comes over as a persuasive driver for change. The extent to which he is able to persuade the partner ecosystem that Acumatica offers something that is significantly revenue generative remains to be seen.
Disclosure: Acumatica is a partner at time of writing. Workday, Salesforce, NetSuite, Plex and SAP are premier partners at time of writing.