From John Paterson, CEO, Really Simple Systems
In the nineties you could make money selling accounting systems to small businesses. You'd get a 35% margin on the product (SunSystems, Tetra, Multisoft, Omicron –ah! those names from the past!). You'd charge £4k for the software, about the same again for installation, set up and training, and then (if you had a nice vendor) get a decent margin on the annual maintenance contract, plus upgrades, add-ons and the occasional bit of extra consultancy.
In the naughties you could make money selling CRM systems to small business. You'd get a 40% margin on the product (Pivotal, Onyx, Maximizer)– about the same again for training…. you know the rest.
Heck, back in the 1980s, you could make money selling word processing and spreadsheets to small businesses, and you could sell the PC too. And a printer, floppy disks, old fashioned paper with holes in the sides of it, the list was endless.
The point is that one decade's nice little business for a VAR is the next decades' commodity. People buy accounting software from eBay, and kids are taught how to use Word and Excel at school. So now the turn has come for small business CRM systems.
Marketing companies who ran lead generation campaigns for their customers. Outsourced IT companies that had customers paying by subscription. These people didn't know how to install a CRM system that needed SQLServer as a backend, or how to synchronise laptops to the central server. They didn't need to. What they knew was how a CRM system would add value to their existing services, not be their service.
So, the old small business CRM VAR is dying, squeezed by the new SaaS systems and by the recession. The savvy ones will move upmarket and install expensive and complex products like NetSuite and Oracle/Siebel. But there is a new breed of CRM VAR waiting to take their places, people who have sales, marketing and business skills instead of IT skills.
Long live the new small business CRM VAR.