A number of Sage partners have reported receiving an email asking that they sign a petition to ” ask that Sage Inc. reconsider the proposed Tier Level Calculation changes to be effective on April 1, 2012″.
The petition appears to have been created by Peter Ribeiro of Impac Solutions Toronto, Ontario – a Sage Accpac and Microsoft reseller.
The petition largely asks that Sage rescind their recent plans to measure the tier move-down calculation quarterly instead of bi-annually as was previously done. Some believe that this calculation may result in more VARS losing some tier commission.
Whether this approach will be successful remains to be seen. Increasingly Sage seems to be guided by the overseas corporate parent and is facing a huge branding project expected to take the better part of the next year.
The question of more tier is only one small part of what most VARS should be worrying about. The more pressing problem is fast movement of technology and the shifting tastes of the technical buyer.
I think you can make great arguments both ways– the first from Sage’s standpoint is “sell more” and this problem goes away.
The second from the partner perspective is ” you’re taking money out of VAR pockets to show improved North American results”. Note: The Sage earnings reports are not detailed enough to know if this is accurate or not.
— Peter Ribeiro (@peterribeiro) December 10, 2011
In neither case is the best route totally clear to me.
I’m more of the opinion that the era of VARS making money off software / maintenance commission is winding down. We’ll likely see it chipped away each year.
SaaS vendors sit and claim you’re going to earn x % recurring revenue each and every year for the life of that customer contract…
BAWHAHAHAHA – yeah ok. I think we’ll have to agree to disagree on this (as I’ve often done during these presentations at ITA).
From the SaaS side of the fence, Dan Druker, SVP Marketing and Business Development for Intacct has this argument to make about how the economics of cloud/SaaS favor the SaaS vendors.
In my opinion we can either fight change– or adapt our businesses so that the sale of software / maintenance is less of a driver of our revenues.
I’ve recently said that the VAR opportunity is:
1. All about local
2. An increasingly tough argument to tell customers that every upgrade has to be a “spreadsheet quote” with a hefty budget.
3. SaaS is not a cure all since the cost is often prohibitive, lock-in can be steep and many features are missing that present customers expect.
4. In my opinion no vendor/publisher is going to pay a lifetime guaranteed residual. Wake up and smell the coffee.
From The Petition Site:
On October 20th, 2011 Sage announced new Tier Level movement changes, effective April 1, 2012, that will make it more difficult to maintain tier levels. Whereas, with the current tier calculation method, a partner’s tier level could increase four times a year but decrease only twice a year, the new policy would increase the chance of a decrease to four times a year. This change will result in some partners losing 10% margin on sales and 5% margin on Customer Care commissions. This new policy comes on the heels of other changes introduced by Sage to its partners over the last 5 years such as:
· Introduction of “new license” revenue as a requirement to keep tier levels, introduced during the biggest downturn in the North American economy since the great depression
· Reduction of Software Assurance margins for most partners from 35% to 20% since margins were based on renewal revenue and now it’s changed effectively to “new license” revenue
· Offering of low or no cost training directly to clients – taking away parts of this revenue stream
· Offering of low or no cost support– taking away parts of this revenue stream
· Changing from yearly to semi-annual tier down calculations
During these tough economic times, it would be in everyone’s best interests to make it easier, and not harder, for partners to maintain their tier levels. Therefore, it is incumbent on all Sage mid-market partners to request that Sage reconsiders this proposed change to the Tier Level Calculation.
So far there appear to be 11 users who’ve signed the petition which may be viewed at Change.org.