Building revenue from Google Apps

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Building Revenuefrom Google Apps

Building Revenue from Google Apps 02

Table of Contents

Summary/Questions 03

The Google Apps (Limited) Opportunity 04

The Other Factor Creating an Opportunity 05

Utility vs. Value 06

Four Core Services 07

Make it So 10

About the Author 10

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Summary/Questions

As we move further into the 21st century, overheated server rooms are beginning to

cool down as Wi-Fi networks heat up. For more and more organizations, cloud

technologies are replacing on-premises software and hardware solutions—and

leading the pack is Google Apps. This productivity suite is rapidly becoming the

poster child of how IT energizes and transforms business.

There is no question that Google Apps represents a sea-change shift in how

organizations approach computing and productivity. The question is how to build a

profitable and sustainable business around the new cloud-based IT modality.

Not everyone is riding the clouds. Traditional IT VARs still approach cloud services

as if they were products. When an IT reseller sells a product—say, a printer—the

value lies in immediate functionality, and then it decreases over time. With every

product the reseller implements, its revenue annuity increases with a cycle of sell,

fix, and replace. As product values wane, the reseller’s value to the customer as well

as its revenue increases thanks to updates, repairs, and eventual replacement.

This inherently flawed interpretation of “rinse and repeat” is fueling the adoption of

cloud services such as Google Apps. Cloud services such as Google Apps get better

over time. Plus it offers end-user organizations a compelling opportunity to reduce

costs. But what does it offer the reseller partner? Very little: $10 per user per year.

There is a way to ride the cloud into a sustainable channel partner business. Since

the revenues associated with built-in obsolescence disappear in the cloud, the

product-oriented business model needs to be thrown out. The modern cloud-partner

adheres to a new philosophy. These partners realize the solution to building a

healthy, sustainable business lies in making cloud services work together. The

opportunity lies not directly within the cloud applications, but rather between them.

To illustrate the point, consider the diagram below. Asked to describe the graphic,

people commonly mention lines, crosses, and circles. Wait—circles? There are no

circles in the diagram.

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The cloud can be visualized similarly. Think of the crosses as the cloud-apps. The

circles represent the integration opportunities, known as middleware. They are as

clear as day, yet many can’t see them—yet there are more circles than there are

crosses.

Most people are focused on the lines. Yet these cloud apps provide the foundation,

not the solution, for a sustainable channel partner business. To achieve success

requires connecting Google Apps to other critical cloud-related services such as

UCaaS and CRM. It isn’t a matter of simply adding more apps, but interconnecting

them. This way, cloud services provide organizations with a totally new and often

shocking transformational advantage. Delivering customers true value lies in

building on these advantages, not depreciating assets.

This paper examines the pitfalls and the opportunities for Google Apps partners. It’s

a path worth pursuing, because the rewards are significant. The cloud-focused

reseller can deliver incredible value to customers while simultaneously building its

own revenue and ensuring longer term renewals.

The Google Apps (Limited) Opportunity

It’s time to rethink the technology VAR. The term, which stands for value-added

reseller, was popularized when PC resellers replaced factory-direct mainframe sales

teams. VARS are from a different era—back when products were things. Today, the IT

channel is about services and the cloud. The “value add” part remains critical, but

the “reseller” element is more for linguistic convenience. The modern IT channel is

about Value Added Services.

Not only IT, but all kinds of channel partners across industries are undergoing

transition. In the past, the channel focused on physical goods. Newspapers relied on

distribution partners such as retailers and paperboys, as well as suppliers for paper

and ink. When newspapers became virtual, these partners largely disappeared. The

same occurred with music stores (CDs to MP3s), travel (local agents to e-tickets),

and movies (video rental stores to movie streaming).

Channel partners in most industries are distancing themselves from physical goods

and focusing instead on helping customers realize the benefits of services. This is

especially true for the IT VAR because cloud-delivered services are changing

everything. Cloud services are far more than simple alternatives to products. The

cloud offers compelling new ways to work, especially in the areas of mobility and

collaboration.

Thus, Google Apps presents a compelling value proposition for VARS, especially

those selling to businesses, schools, and government offices. The Google Apps

channel opportunity offers revenue from the initial implementation and then

recurring revenue through renewals. The problem is that it is hard to build a

sustainable business based on $10 per user per year. This margin may not even

cover the marketing and sales costs associated with the initial customer. A viable

business needs additional revenue streams.

The traditional IT VAR thrived on the initial transaction. The software and hardware

along with installation services. IT servers in particular were the gift that kept

giving, each one sold provided the dealer a revenue annuity. Actually, the constant

costs associated with server upgrades is one of the factors driving the adoption of

Google Apps.

So this begs the question: how does the new channel replace the hardware revenue

that nourished the old channel? The answer lies in broadening the Google Apps

conversation. Successful Google Apps resellers offer complementary solutions that

leverage a customer’s Google Apps deployments. Customers win with a truly

integrated solution that only cloud services can provide. The partner is rewarded

with expanded implementation services, recurring revenues, and improved account

defenses leading to higher retention and renewal rates.

The Other Factor Creating an Opportunity

Two major factors are creating an attractive opportunity for Google Apps partners.

The first and obvious factor is the appeal and low cost of Google Apps. The second

comes from the inability of traditional channel partners to adapt. Together, these

factors are creating a lucrative opportunity for the cloud-savvy.

It is a recurring theme: when business models change, major players are unable to

make the transition. Think of Blockbuster, RIM, and Borders, all leaders that fell

from glory in the face of a major industry transition. The IT channel is going through

a disruption that is sending users to cloud services. As cloud services move in, IT

VARs see declines in upfront revenues. As the big sales fade away, so do the

associated revenue streams (troubleshooting, upgrades, backups, HVAC issues, and

repairs).

It is a disruptive change. The traditional IT VARs require large upfront transactions.

These fuel the entire business, including compensation plans, management

expectations, and cash flow requirements. These entrenched processes are difficult

to change. The emerging cloud partner nourishes its business by broadening

recurring subscription revenues, together with custom integrations and support.

The differences are not minor and represent a difficult transition that many

traditional VARs will never make.

In this environment, IT channel partners that focus exclusively on delivering

cloud-based services have the advantage. Hardware sales, particularly under

internet pricing pressures, are low-margin commodity business liabilities. The IT

VAR is far more agile and focused on value through cloud services.

Utility vs. Value

The Google Apps solution is actually reasonably simple to implement. Many

customer organizations do so without any outside assistance whatsoever. As with

many cloud-based services, self-service is inherently built in. So it begs the

question: why does Google even have a partner program? The answer: because it is

not about Google Apps.

Sure, there’s opportunity in reselling and implementing Google Apps, particularly

for small business customers. Many small business customers don’t have the

technical expertise to implement the solution, and these organizations frequently

work with partners. It’s perfectly reasonable for a partner to provide basic

assistance with initial setup. And then the project ends, and the customer becomes

self-sufficient. It’s called a utility sale, and there’s no shortage of utility-class

resellers. But the utility model is not sustainable for most partners. It requires a

constant search for new customers, and someone is always willing to do it for less.

The trick is focusing more on the value-add part of the VAR equation. It is not about

reselling, nor about cutting costs—it is about creating value, and this focus extends

to more than small business customers.

Here’s the secret: customers tend not to pocket potential savings. Instead, they

more often prefer increased value. It is a phenomenon called Jevon’s Paradox, which

states that technological progress that increases the efficiency with which a

resource is used, tends to increase the rate of consumption of that resource. It isn’t

particularly intuitive, but holds true with many examples. Consider gas prices: when

prices drop, people drive more. Simply stated, the higher the savings, the more the

customer is willing to spend. The mistake utility partners make is reducing costs and

then walking away, in a hurry to find a new customer.

Google encourages partners to pursue a value sale. Google Apps provides the

foundation to upgrade not just core components like email to Gmail, but rather

entire business processes. The cloud enables opportunities for unprecedented

efficiencies and capabilities, allowing organizations to upgrade internal processes

in ways that most businesses can’t even imagine.

The opportunity exists because typical business process reengineering efforts focus

only on the features of specific business applications, ignoring the human

inefficiencies between processes. For example, emails often require a follow-up call,

but email systems typically are not integrated with phone systems, contacts, or CRM

systems. Business processes should be integrated with communication channels.

Communications-enabling processes mean better connections, improved response

times, and overall greater efficiencies. To get here requires four core

complementary components.

Four Core Services

Four core services, when combined with Google Apps, create a unified solution for

the customer, increase customer loyalties and renewals, and create a path to

sustainable profitability for the reseller. The four components are: broadband

networking, UCaaS, business apps, and middleware.




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Four Core Services





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Q: why does Google even

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A: because it is not about

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Four Core Services





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Four Core Services





GoogleApps

Broadband

BusinessApps

Middleware UCaaS

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Broadband: The fundamental shift that is occurring is from premises-based

solutions to cloud services. This means the internet and access to it becomes

mission critical. Business customers often make the transition to the cloud without

giving network connectivity proper consideration. Consumer-class services or coffee

shops are fine for an individual, but not acceptable for the modern, cloud-based

business. Keep in mind we are talking all communications here—voice, email,

calendaring, office productivity apps, even SMS will utilize the broadband

connection in a modern cloud-based business. The internet no longer can be an

afterthought.

If a customer’s internet experience is poor, so is their perception of Google and the

reseller that provided it. Even worse, the perception of the customer’s customers

also drops with poor-quality interactions. Partners need to be prepared to design

and size reliable and sufficient network connections. Partners should establish a

relationship with a master agent that offers multiple carrier services. As an added

bonus, carriers and master agents offer recurring commissions.

UCaaS: Unified Communications (UC) combines traditional voice communications

with additional, modern forms of real-time communications such as IM/presence,

video, mobile solutions, and messaging. UC is about multi-modal communications,

not just voice. The traditional approach for voice communications is similar to

mainframes—on-site, proprietary equipment and networks. Now, organizations are

moving toward a service model known as unified communications delivered as a

service (UCaaS). This approach aligns nicely with Google Apps.

Google Apps resellers should establish a relationship with a UCaaS provider. There

are thousands of them, and there’s no need to restrict partners to local options.

Despite the quantity of providers, they all build their infrastructure from only a

dozen or so configurations. The most prevalent are providers that use BroadSoft

software, which can integrate to Google Apps.

Google Apps inherently provides some UC components including IM/presence,

video, email, and SMS. Where Google falls short is with voice solutions, including

business-class features, devices, and applications such as a contact center. Leading

a client to UC will offer rewarding improvements in communications, flexibility to

use mobile devices, support for remote working, and improved interactions with

customers. Integrating Google Apps with UCaaS delivers improved revenues and

customer loyalty.

Business Apps: Google Apps facilitates a business, but doesn’t run it. For that, most

organizations rely on specific applications such as customer relationship

management (CRM) and financial/accounting packages. Like Google Apps, general

business applications are also in the midst of a mass migration toward the cloud.

Solutions such as SalesForce.com and Zoho.com provide advanced features for a

fraction of the cost of on-site servers.

The practice of assisting with this migration is not only lucrative itself, but highly

complementary to Google Apps. In both situations, the customer already trusts the

cloud and has moved past the emotional need of on-site servers. Many of these

solutions, such as Zoho, offer agent commissions, and the setup and migration

often require outside expertise the partner can provide. The best part of these

applications is they can interface with Google Apps including Gmail, Calendar, and

Contacts. Even Docs can connect to most cloud-based business apps, creating

exceptional value for the customer.

Middleware: This last category is the secret sauce. It’s the most critical, the most

misunderstood, and the simplest. Google Apps, UC, and CRM are core to the

growing trend of cloud adoption. Obviously, the three categories are stronger when

tightly integrated, but that’s rarely the case. Instead, the major cloud application

providers offer APIs so that customers can perform their own integrations, but that’s

also rarely the case.

Middleware provides integration between these critical applications. Middleware is

not another cloud service, but instead makes cloud solutions more valuable.

Multiple middleware vendors offer an assortment of integrations. Most relevant here

is gUnify, which connects Google Apps with UC and CRM solutions.

gUnify is not another piece of premises-based software that gets installed on

desktops; instead, the Google Apps administrator enables it. A Google Apps gadget,

gUnify brings communications-enabled processes to your inbox. Once enabled with

Google Apps and a BroadSoft UCaaS provider, the user can, for example, click to dial

a number in an email as well as click to hang up. Connect it to a popular CRM like

Salesforce.com or Zoho, and the user can enter CRM call notes directly from email.

Where the traditional IT reseller found servers to be the gift that keeps on giving, the

modern Google Apps reseller should look to middleware. It is more than just another

revenue source because it solidifies the others, creating additional value and

improved customer retention. By extending Google Apps across business processes,

resellers provide customers phenomenal improvements in productivity.

With these four core services, a small business can have the same integrated,

communications-enabled business processes that large enterprises implement. The

difference is that instead of involving millions of dollars and hundreds of servers,

the Google Apps partner delivers it all without a major upfront capital investment or

on-site servers. All four core services work in harmony to deliver true value to the

customer, recurring revenue to the partner, and long-term customer relationships.

Make it So

As the IT channel changes, some things never change. Selling on price is a sucker’s

game. There’s always someone’s nephew who “knows Google” and who will do it

cheaper. Instead of worrying about driving down to the lowest cost, partners need to

build long-term business relationships that create mutual value. The opportunity to

specialize in Google Apps isn’t as much about Google Apps, as it is about

understanding how to leverage the value of a specific product or technology within

a broader solution.

To put this plan into action, start with gUnify.com for referrals and best practices.

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About the Author

Dave Michels is a principal analyst at TalkingPointz, focused on business

communications. Dave focuses on research and writing about telecommunications

and unified communications market trends. He offers an irreverent, incisive take on

the industry, TalkingPointz has become one of the most influential and

often-quoted/linked blogs in the enterprise communications industry.

Dave has also become one of the most popular contributors to the enterprise

communications industry’s leading independent websites, including NoJitter.com

and UCStrategies.com. He also contributes to the GigaOm Pro, TechTarget,

CloudAve and Voice Report websites. Finally, Dave is a key participant in the

enterprise communications industry’s leading conference, Enterprise Connect. In

addition to delivering presentations on major topics, Dave also oversees Enterprise

Connect’s Innovation Showcase, which spotlights new and innovative vendor

companies within the industry. Dave is also a frequent presenter at other industry

events, and routinely attends and covers vendor conferences for analysts and

consultants.

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© 2012 gUnify LLC All Rights Reserved

Education

Building revenue from Google Apps