What makes a successful ecosystem partnership in the age of SaaS?

By Beata Wright

February 16, 2022

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(© mohamed_hassan - Pixabay)

The qualities that made a great technology channel partner in the past may not be what's needed to make them a great ecosystem partner in the age of SaaS. In the days of hard-coded, on-premise software deployments, systems integrators and value-added resellers installed the vendor's products and sold lots of their time coding bespoke customizations and integrations.

Nowadays, the role of the partner is more about engaging with a vision of what the SaaS platform can do for the client's business, as opposed to simply selling and installing the technology itself. The partner's role is to help the client achieve business value more quickly by successfully implementing the best practice industry models that the vendor has built into their platform.

These industry models give the client automatic access to the latest business processes, which the vendor keeps up to date as they evolve. Rapid implementation by the partner not only keeps costs down but means the client starts seeing real business value sooner.

New revenue streams for the partner

In this era of quick, simple implementations, the partner needs to find other ways of adding value and growing revenue. A growing trend is to offer consultancy by being an expert in a particular industry or business function. Offering advisory services enables the partner to earn revenue while helping the client develop its business in line with trends in the sector.

A partner can also add value by using the SaaS product's extensibility to develop add-on applications on top of the standard platform. For example, in a given industry, some organizations may follow a variation of best practice that's not covered by the vendor's standard industry model. The partner may decide it's worth developing an extra application to be used in conjunction with the standard SaaS platform to meet this requirement.

Often, partners will then choose to sell this add-on app through the vendor's marketplace. Any forward-looking vendor will have set up a marketplace, app center, or digital storefront specifically for ecosystem partners to offer these add-on apps to the user community, with the revenue being split between vendor and partner.

The role of the vendor in supporting a SaaS partner

In the SaaS world, the vendor-partner relationship needs to operate on a shared success model. Revenue for both is dependent on the client actually using the platform. If the client succeeds, then the partner and vendor succeed.

The fundamentals of good IT channel partnership still count for a lot in the age of SaaS. It's in the interests of customer success that the vendor and partner should value each other, be strategically and culturally aligned, and committed to a close, long-term business partnership. 

Where they both specialize in the same set of related industries, it's important for the vendor to support the partner with a knowledge-sharing program. The vendor needs to share their insight into strategic developments in the sector and allow the partner to participate in the customer community so that they remain aligned on evolving trends.

Partner enablement programs are still critical, but their content and delivery formats are different these days. A progressive SaaS vendor now offers blended learning courses that combine online with in-person sessions. These also allow the partner more time than before to complete the course at their own pace, which tends to produce higher scores.

A good SaaS vendor will then work alongside their partner through a staged shadowing process. In the first implementation, the vendor leads and the partner shadows; in the second, they operate as equals; and by the third, the partner is leading and the vendor merely supporting.

A new definition of success

A partner's success and their position in the partnership tiering structure are no longer defined just in terms of volumes, discounts and revenue levels - success is now defined by client satisfaction. 

The best vendors today give more credence to peer reviews on sites like Raven Intelligence, where clients evaluate their experience of working with a partner and using the vendor's software. In other words, the ultimate definition of success — for both partner and vendor — is defined by how the client feels about the partnership itself and the outcomes it delivers for them.

This is a much more democratic way of measuring performance. Of course, the vendor will still monitor the partner's revenue generated from SaaS sales, features adopted, up-sell and cross-sell rates, and so on. But the primary driver of commercial reward for the partner will be customer success metrics such as the net promoter score given by the client.

A partnership as different as the software itself

A SaaS platform is very different to on-premise software; and so is the partnership that delivers it.

A great SaaS partner specializes in an industry or business function and adds value to the client through consultancy and application development. A great SaaS vendor supports the partner with knowledge sharing and comprehensive enablement programs.

Ultimately, the success of the vendor-partner relationship in the age of SaaS is measured - neither by the vendor nor the partner - but by the satisfaction and success of the client.

To learn more, read this Q&A with the founder and CEO of longstanding Unit4 partner Embridge Consulting.