Channel research conducted by IDC and commissioned by Sage found that:
- Channel partners surveyed consider themselves half way (51%) along the journey to becoming cloud ready
- 66% of channel partners surveyed believe that cloud enables them to have a more predictable recurring revenue stream
- Just over half (58%) believe SaaS opens doors and gets them into new accounts, and improve the rate of new customer acquisition
Channel partners say top business metrics that have been positively affected by offering cloud services are; growth, gross margin and repeat business from existing clients
Research conducted by IDC and commissioned by Sage, a market leader in cloud accounting software, reveals that channel partners consider themselves only halfway to having their existing operations to be 'cloud ready' despite the recognition of the benefits that the cloud offers them.
"The Future is the Cloud" research shows that those that have embraced cloud offerings for over 5 years typically experience higher profitability. The IDC research also shows that channel partners who have invested in cloud sales people, technical people and services achieve the highest profit margins.
"We see cloud growth accelerating across most markets and customer segments, with cloud software growing at five and a half times more than traditional software," says Margaret Adam, Program Director at IDC. "It's also increasingly the key delivery method for broader digital transformation and so we see cloud at the center of industry growth."
Adam says IDC recognizes that cloud represents a big opportunity, but it's potentially disruptive and resistance can come from a fear of new technology and the challenge of moving to a recurring revenue model, as many partners still struggle to make the transition from the on-premise to 'as a service' model.
"In saying that, this research highlights that those who have started offering cloud have seen a number of benefits, including new customers and increased revenues," Adams says.
"It's predicted that by 2020, 70% of all software will be provided in the cloud," says Alan Laing, EVP of Partners and Alliances at Sage. "At Sage, we want to bring our partners with us on that journey so they too can reap the rewards that have been clearly highlighted for cloud-ready channel partners."
Laing says Sage is working with its partners and customers to take them to a world where they spend minimal time on business admin, freeing them for the tasks that help them grow and thrive. The research shows how crucial cloud technology will be on that mission.
Other key findings:
The Cloud Opportunity for the Channel
- The channel recognizes that having a SaaS business brings them greater opportunity for growing their business with:More than 90% of channel partners anticipate that the revenue they generate by SaaS will grow.63% believe it creates new up-sell opportunities.
- Over half (58%) believe SaaS opens doors for them and improves the rate of new customer acquisition.52% say it enables faster business growth.
- 47% believe it offers them higher levels of profitability than their on-premises business.
The top three business metrics the channel believe have positively impacted them by offering cloud services are:
- Growth (49%)
- Gross margin (34%)
- Repeat business from existing clients (30%)
Cloud-Based Services Provide Additional Revenue Streams
Cloud ready channel partners are seizing the opportunity by offering services to support their SaaS businesses:
- Consulting (80%)
- Integration services (79%)
- Training and education (62%)
- Support services (79%)
Long-Term Profitability for the Channel
The longer channel partners offer cloud solutions, the more profitable they become:
- 20% of channel partners who have had cloud offerings between two to five years made over 20% profit
- For channel partners who have had cloud offerings for over five years, the figure rises to 44%, with 20% of these making over 30% profit
Cloud Investment Reaps Rewards:
- Over half (51%) agree their sales cycles are quicker for SaaS
- 52% agree that SaaS provides faster business growth
- Just under half of channel partners (46%) feel they achieve a higher revenue per employee in their SaaS business
- Over 50% of channel partners are already investing in building a 'customer for life' focus for their cloud customer base and a further 31% are in the process of considering it
Cloud Support for Accountant Partners
Further emphasizing its support in helping partners moved to the cloud, Sage today previewed Sage Accountant Cloud. A brand new connected platform that brings together a portfolio of cloud applications to provide accountants an overall view of their firm, allowing them to manage their practice and their clients more efficiently than before and provide additional enhanced services, from one central point.
Available in the UK in the summer and in the United States in the fall of 2017.
For more information on Sage Accountant Cloud, click here.