I have read a lot and heard a lot recently about NetSuite as a competitor to GP. I called with a friend of mine who I know was a Netsuite user to see how things were going – only to learn ‘we hope to change out to an on premise application early next year’.

I asked more questions and did a little research online and it seems to me the success of an ERP, at this point in time, has nothing to do with Online/Offline. Yes in the small end of the small business market – an online version of MYOB, QuickBooks or Microsoft Accounting would be useful. The reason is this market needs simple, cheap and rigid.

The biggest problem facing all ERP vendors is the quality and profitability of the partner Channel. This is something that the GP world has in abundance. Microsoft have great partners.

Perhaps the most important aspect is that Microsoft have profitable partners. We all know that this does not happen overnight, but as a result of years of experience the GP partner community knows how to make money out of implementing and supporting Dynamics GP. What the partner community has that lets this happen is:
1. Good solid customer base
2. Highly educated consultants
3. Experiences sales team, that also know the products
4. Close relationship with Microsoft as a vendor
5. Build close relationships with customers for the long haul.

The things that make a project go bad, making it unprofitable for a partner and/or creating an unhappy customer are related to the above:
1. Over Selling by salespeople
2. Lack of implementation expertise. One consultant mistake can cost a fortune.
3. Product quality. Bugs, issues with software will cost partner dearly.

We all saw over the past few years when many GP partners jumped on the AX bandwagon -that many went bust and others struggled massively. Why? All of the above. It takes years of effort to build a repeatable model that works and makes money.

So when you take a SaSS model such as NetSuite (even CRM) – how does the partner make money? Margin tends to be very low and is all monthly – which makes it hard to pay the sales teams fairly and out of cash flow. Services tend to be built on a ‘get in and get out structure’ which will not build the relationship required for ongoing revenue. So if partners are not making money – they lose interest very quickly.

So what happens when the vendor decides to sell and implement direct as a result of a struggling partner channel? The same problem as we discussed above. The get in get out mentality does not work, service delivery falls in quality and the vendor is suddenly losing focus on development improvement to consulting utilisation.

So raise your glasses to the GP partners. Partners do a great job, build long term relationships and make money. In reverse, GP customers usually want their partner do well and make money also. The better the partner does, the more services they can offer, the more customers they attract which in turn increases their knowledge and experience and expertise. So Partners look after your customers – and customers look after your partners.

This alone means that Microsoft will continue to build great product, partners will take it to market and customers will be given great systems to run their business. Should GP start looking at online services? Absolutely, but it will take time and needs to be done in a way that keeps this channel profitable.