Today’s independent ERP reseller faces a conundrum. Many have partnered with one of the big ERP vendors to offer their customers the breadth of features, cloud applications and mobile-enabled tools associated with ERP giants such as SAP or Microsoft.
But so have their competitors.
Losing customers to rival resellers is inevitable, but replacing them with new customers to maintain market share is impossible when everyone is selling the same ERP solution. Price cutting is not the answer – it just means fighting the battle again a few months further down the line at a lower price point, and no serious business can sustain a race to the bottom.
So standing out from the pack means either developing exclusive plugins that rely on chance partnerships or in-house developments, or outperforming the competition on service delivery and vertical expertise. There is also the added problem that an urgent business challenge for the reseller doesn’t always correspond to the timeline of the ERP vendor.
At this point, many resellers feel as if they’ve reached the end of the reseller road, when actually they’re at its fork – there is the option of innovating with a white label ERP solution.
The lure of Global ERP
What does success look like for the typical reseller? Essentially, it’s taking a flat-pack, out-the-box ERP solution and then applying the means at their disposal to adapt it into a bespoke, made-to-measure solution to meet the specific needs of the customer’s vertical or location. The key proposition is ‘value added’ resale. The competitive services battle is often fought over the last 5% of functionality not the core accounting, CRM, business intelligence features where the big ERP vendors dominate.
Resellers carve out market share when they can successfully ‘adapt, enhance and implement’ a chosen ERP via the services and 3rd party resources/platforms they have at their disposal. Understandably, most will select from one of the Top 10 vendors (SAP, Oracle, Intuit, Sage, Netsuite etc.) that account for roughly a third of the ERP market between them. Given that the ERP software market will be worth over $78 billion by 2026, the big vendors deploy some serious sales and marketing budget to stay front of mind.
Many resellers, however, will soon discover that the ERP vendor’s partner support team is not as well resourced as the sales team. The vendor sells the solution, and it’s largely up to the reseller to provide the support, services and relationship. With software development resources, the reseller can add on new functionality by integrating third-party tools and features or create their own without having to change the core but that comes at a cost or if the reseller is large enough they can revert to the ERP vendor but development timelines are likely to be prolonged or wrapped up in layers of bureaucracy.
The pros of choosing an ERP giant
Most of the big ERP vendors offer partner-packaged solutions that can be tailored to a vertical, so the idea that big vendor means one-size-fits-all functionality no longer holds true. Often, however, those customization options come with a degree of complexity that inhibits user experience and still that last 5% in terms of an individual business’ customization requirement is lacking and can’t be accommodated by the core solution.
The most compelling arguments for choosing big ERP, however, are cost and risk. The big players are able to offer the most attractive upfront deal that limits capital expenditure, and their solutions are rigorously tested over a longer time to market, so present a lower risk of failure at deployment.
Where Big ERP falls short
It is the responsibility of the value-added reseller to know everything about their vertical. That’s not a priority for the vendor, most of whom are focused exclusively on customer acquisition, not support and nitty gritty customer requirements. They are all about the macro whereas the reseller often wins deals based on the micro.
For that reason, many resellers will find that the onboarding support, customization options, and quality of partnership agreements offered by the big ERP players is lacking, either at the beginning of the process or when it’s time to upgrade a platform that is no longer fit for purpose. Because each reseller is one of thousands spread across global territories, it can be a struggle to secure their attention at critical moments.
The result is that after a few years of partnership with a big ERP vendor, many resellers are losing customers and feeling frustrated:
- The realisation dawns that the tools that worked in the past are no longer fit for purpose – and the vendor has no immediate plans to upgrade functionality or that the plans they do have are too long in the future.
- Customers are lured away by reseller or ISV competitors who have anticipated their next move and associated software requirements.
- The current ERP platform is no longer innovative enough to attract new customers.
- Starting from scratch with a new ERP is out of the question given the disruption and expense of software development that lies outside the resellers core business offering.
At this point, vendor and reseller reach an impasse. The vendor maintains that their solution is fit-for-purpose as far as functionality and innovation are concerned, but the reseller finds themselves disappointing customers or losing deals with increasing frequency.
Where vendors have specialized in primary verticals – usually by consuming smaller providers (eg. Intuit acquiring TradeGecko) – it’s often up to the reseller to take care of integration, customization, implementation and end-user training. Many vendors simply don’t provide the toolkit.
Resellers, therefore, find themselves at the mercy of their ERP vendor, the latter retaining control over the roadmap, revenue and pricing models. Smaller resellers in particular have limited leverage to ensure their requests are a priority.
From the customer perspective, all ERP resellers are reskinning the same core software and the competitive parity, particularly in the mid-market, is inhibiting growth.
How Resellers Can Stand out with a White Label ERP Solution
What does satisfaction look like from the end-user perspective? Top of the list is browser access in the new Post COVID normal.
Of course, the Tier 1 flagship vendors claim to offer this, but many customers have discovered to their disappointment that the big vendors have simply reskinned their existing platform with a flashy new web interface. It’s innovation without anything new, and the UX and functionality are often not up to standard.
The right White Label ERP solution can provide the solution that end-users are looking for, but a surprising number of resellers are not even aware the option exists. It’s worth their attention, however. The service revenue opportunities for implementing and supporting White Label ERP solutions are also significantly higher than that of a ERP reseller business model.
Why White Label Occupies the Software Sweet Spot
The future of ERP architecture is a network of third-party APIs, plug-ins and microservices integrated with core browser and desktop software platforms to take care of the essential, automated tasks reliably and with little human input required. It is autonomous and hyper-personalized without compromising upgrade paths. Above all, it facilitates unique and differentiated offerings.
It’s not that big ERP can’t deliver these. In fact, most big vendors have created bespoke solutions tailored for specific verticals, but they are not designed to push the technology to the edge and to enable resellers to carve out a differentiating USP driven by the technology part of the solution equation. That can lead to businesses fitting their purpose to suit their software, rather than moulding their software to empower their unique requirements.
Enter the White Label ERP solution, where the reseller can form a deeper level partnership with the end-user to identify and deliver (as well as scale) the additional and/or hyper-personalised functionality required.
The reseller’s consultancy team won’t need access to the framework to adapt it to their needs, because many white label ERP solutions come with a code-free agility tool-kit to enable the services team to make the vast majority of changes required by the customer on-site, without impacting the core or affecting upgrade capability.
Most importantly from the reseller’s perspective, the client relationship moves from transaction to interaction. Many White Label ERP solutions operate with a finite number of partners, offering regional exclusivity, so the reseller adopts true partnership status with direct input into the product roadmap working alongside like minded partners. A White Label ERP solution allows the reseller to grow with their key customers, establish a stronger foothold in their vertical or location, and develop standout solutions that go far beyond the functionality of an out-the-box ERP platform. And they can do this with a product that they ostensibly own and can brand as they see fit.
For those resellers with customers who have specific needs – as if there were any other kind – there’s an alternative to going back to their ERP vendor in the hope of the new solution or upgrade that never comes. The big 10 ERP vendors are not the end of the road.
There is a road less travelled in partnership with White Label ERP, and it ultimately has the potential to lead to a more ambitious destination. One with the opportunity to generate more revenue, specialize in more granular verticals and increase market share.