Building a cloud ERP partner program from the ground up - tips and gotchas from Taylor Macdonald

Profile picture for user jreed By Jon Reed July 28, 2020
Summary:
A cloud ERP vendor is only as strong as its channel. Sage Intacct's channel started small, but it's not small anymore. At the ten year mark, I asked Sage Intacct's Taylor Macdonald about the keys to their channel success - and the obstacles along the way.

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The most underrated aspect of cloud ERP success? A good services partner. A good implementation partner should be deep in industry know-how - and skilled in transformation efforts.

Such a partner has impact long after the initial go-live, via their advisory on new functionality, and adapting to market conditions.

Years ago, I called for the end of "golf course relationships" - ERP projects sold not because of competencies, but schmoozing skills. But good services partners don't thrive in isolation. When going to trade shows was still a thing, I would always do a morale check on the partner community.

How's that done? Now we're venturing into trade secrets, but I'll say this: a nice long walk through the exhibit hall floor, peppering vendors with questions, is a revealing place to start. After-hours events? Let the real truths air.

In terms of partner morale, I would rate the Sage Intacct partner community near the top of those I've personally kicked tires on. So when I found out that the Sage Intacct partner program just hit the ten year mark, I pried some winning tips from the architect and ringleader, Taylor Macdonald, Sage Intacct's SVP of Channel Sales.

Higher partner trust = lower stress

I didn't tell Macdonald ahead of time, but I had some tough questions in mind for him. How difficult issues are resolved between partners is far more important than annual awards banquets, and other channel rituals. Then there is the problem of handling B2B projects during Corona-times.

For readers who don't feel like taking my word for it, how about this? Sage Intacct's partner channel is now responsible for more than 55 percent of revenues (Those revenues are driven by 125+ partners, and supported by fifty members of the Sage Intacct channel team). As per Macdonald, Intacct's growth rates would not be sustainable without that sales channel. But it wasn't always that way. In the early days, Macdonald says it was heavy lifting:

When I got the opportunity in 2010 to go to Intacct, they had tried a partner program a couple times, but it hadn't gone well. My first goal was to solve the issues that made the job so hard. When I look back on the ten years, have we solved them all? No. But we've solved 85-90 percent.

Macdonald sees the core goal as trust:

We have partners that trust us. We have partners that trust each other... We have partners that teach each other. We have partners that volunteer to help each other, because they're not in competition with each other.

Higher trust means lower stress:

After ten years, the stress level is no different than it was two years in. The numbers are a lot bigger, but I think if you asked the team, "What's the learning at the end of ten years?" You start with a clean slate, and a great vision that was formulated by lots of people. Bring in great partners, and if you've got a great product, you can end up with an outcome that is exceptional.

"What do you hate about being a  ____  partner?"

Hold up - that's all well and good, but let's face it, so many ERP partner programs are problematic. Horror stories of sales clashes with the software vendor, bloated projects, overbilling for routine or unnecessary customizations, and clinging to legacy "billable hours" business models. How did Macdonald avoid those issues? One factoid - Sage Intacct still uses the same partner agreement they started with ten years ago. Macdonald advises other partner programs: do your competitive homework.

When I started, the first thing I did, Jon, was I went to those partners, and I said, "What do you hate about being a Microsoft partner? What do you hate about being an SAP partner? And so they told us, we made a list, and then we went and did the opposite.

What did those partners ask for specifically? Macdonald:

  • They wanted to own the relationship with their client.
  • They didn't want to have you discounting, and taking money off their table.
  • They didn't want multiple partners in a single deal.

Handing out awards and thanking partners for their leadership doesn't remove the backwash of backroom dealings gone wrong:

Most channels get screwed up because the vendor or the publisher screws the partner at some point. We've never changed the margins they've gotten; we've never changed the fundamental rules that we operate by... Partners have memories longer than elephants.

I'd classify these as classic partner program lessons. Doing business the right way doesn't really change. But there's a second category of cloud ERP partner excellence: take advantage of modern tools for collaboration and training. Macdonald's team gets plenty of feedback on that front:

They can't believe all the ways that we help them. That's everything from co-selling to marketing to training; everything's free under our model.

Cloud ERP sales amidst a pandemic

I don't care how motivated your partner community is, the pandemic economy is a massive gut check. So how did Sage Intacct partners respond? Macdonald went to an on-the-ground partner event in early March. Then everything changed:

We left thinking that the virus was not going to be a big deal, and that we were going to build on the momentum. March was kind of a crappy month. But April was the top first month of the quarter ever. May was a top second month of a quarter ever... June was not the best month, but overall, we had the second-best quarter that we've ever had.

And the reasons for that success?

Our partners had so many people who came to them and said, "God, I wish I'd done this sooner." You've heard the joke about: somebody went to the office to cut the checks, and they hid the check. Somebody else came to sign them and then hid them. Somebody else came in to mail them, you know - those kinds of things. So there were lots of people moving to the cloud.

Projects had to adjust:

Implementations changed. The way we support partners during this has changed. I don't think anybody likes it... Our partners are used to being in the office, or used to being on-site... We've all had our lives changed, but I think most people have said, "Hey, it is what it is. I can't stop selling. I can't stop helping my customers."

That puts an obligation on Taylor's team:

Our motto of "whatever it takes" has been put to the test. But we're trying to iterate and change what that is, daily, weekly, hourly to what our partners need to be successful. And if they say, "Hey, here's what we need," then we'll go do it... We've already lost three or four of our favorite restaurants in Atlanta; we're gonna lose a lot more. We can't lose partners.

Whether it's economic help, whether it's helping on renewals by reducing prices for people that are affected in verticals, now's the time people are going to remember you for a great partnership, period. Anybody can be a great partner when business is good. But in a time like this when people are stressed at home, they're stressed with their kids about school. This is when you have to prove yourself.

The wrap

We talked about the issues partner channels must confront. When partners account for more than fifty percent of your revenues, channel conflicts are, as Taylor put it, "inevitable." I also brought up the problem of a customer winding up with a partner that just isn't a fit for them. Macdonald mentioned the word "accountability," which is a shorthand way of saying that it's not all handshakes and smiles.

As for resolving those problems, the keys Macdonald mentioned involve transparency, fairness in decision making, and, most of all, putting the customer first. Protecting the customers' ongoing success could mean moving in a new partner, and/or negotiating a shared annuity stream between the new partner and the original one. Macdonald says he always pushes for a happy resolution between customer and partner before doing a "divorce," and that makes sense. Macdonald emphasized such events are rare in his program, but my view is that you still have to resolve them effectively - or see unwanted ripple effects.

I asked Sage Intacct to send me notables of the ten years. A couple that caught my eye: the channel team has less than two percent employee turnover. And: 41 of the top 100 CPA firms in the U.S. are Sage Intacct partners. But Macdonald keeps coming back to stories of partner growth, with examples of partners who started small, and are now in excess of 100 consultants. Such as: "Abe Mathew from CLA was only 20 years old when he first started working with Intacct. 17 years later he's running the SI practice for one of the largest CPA firms in the country."

Do I see room for improvement? Yes - in particular because of my bias towards the verticalization of cloud ERP. I've documented some interesting Sage Intacct vertical partner successes, from private equity to faith-based communities and oil and gas. Still, in my view, vertical expertise is not the end of it. I like to see partners building industry applications on the cloud ERP platform, extending the (micro)vertical reach beyond what the vendor can provide.

I know Sage Intacct is pushing in this direction, but that's where I'm personally looking for more. But hey - if Macdonald didn't have some challenges on his plate, I get the sense he'd get bored pretty quickly.