ERP and Old CellphonesReading the insightful article by our guest blogger Jason Carroll last week about how the ERP reseller scene is being changed by the Cloud, I can't help but think back to the times when I had, ahem, a pager.
Yes, I realize I am revealing my age here, and that the link between the ERP Cloud and pagers doesn't seem obvious, but bear with me.
At the time, pagers ruled the consumer communications airwaves. Almost every business person had one. The few early cellphones that were available at the time were big clunky bricks that gave the bicep a proper endurance workout for a 10-minute call.
And boy did those early cellphones hit the wallet hard too. While it was kind of cool to have a brickphone, it really wasn't too practical, it was a one-trick pony, and it certainly wasn't ready for mass adoption.
Fast forward a few years, and we see cellphones getting smaller and becoming packed with advanced apps and features. The age of the cellphone finally arrived, and the era of the pager had begun to end. Many pager owners abandoned their little beepers for a cellphone as soon as their contracts ran out.
Those who still used pagers did so for very specific reasons, such as in compliance to corporate policies, or maybe they couldn't get out of lengthy, restrictive contracts.
Just about everyone else who didn't yet have a mobile communications device bypassed pagers and went straight to a cellphone. These included not just people in the developed North American, European, and Asian markets, but also in developing countries, where pagers were pretty much leapfrogged over.
Growth of SaaS ERP heralds passing of on-prem versions
What does all that have to do with the Cloud ERP?
Well, think of the pagers as traditional on-premises ERP systems, and cellphones as Cloud ERP.
LAN-based, on-premises ERP systems have powered corporate backbones for years, if not decades. Many have costly, burdensome service contracts that don't too much beyond providing peace of mind. While there were early web-based ERP interfaces, they were not true Cloud ERP solutions. Maybe a little VPN tunnel here, or a lightweight interface there, but nothing really built for the Cloud. Early cloud was the brick-phone of mobile devices.
Today, Cloud ERP solutions have come of age, with rich and advanced functionalities from vendors such as Acumatica and NetSuite that are ushering in the era of feature-rich, enterprise-class and affordable ERP. And perhaps, signaling the beginning of the end of the old LAN-based, on-premises ERP models.
While the Cloud ERP may yield a smaller margin, there is also a greater opportunity to cast a much wider net to companies and organizations that might never have been able to invest in an ERP system.
Here our pager and cellphone analogy comes in useful again. Not only does our comparison apply to these entities new to Cloud ERP in the developed market, it is especially relevant in developing countries, where legacy ERP systems have been less common, even among major enterprises.
Cloud ERP changes the current resale model
In both instances, Cloud ERP is the leapfrog technology that carries with it a huge potential to convert leads whose first ERP infrastructure will be built in the Cloud.
And this is where we return to Mr. Carroll's post. This shift to the Cloud ERP will significantly change the ways that traditional on-premises resellers carry out their sales and marketing activities – that is, if they want to stay in business.
To sum up Mr. Carroll's point, success in the cloud is predicated on the ability to keep sales and marketing costs low in an environment where revenues will shrink and margins will be slim. In his words: "You need to generate more leads, pre-bias them to do business with you, and cut your project delivery time down to a fraction of where it is today."
The era of the Cloud ERP is here, and if you are a reseller that is still only offering an on-premises ERP solution, you'd better figure out how to build a strong Cloud ERP practice soon, or, risk going the way of the pager reseller.