In 2017, we decided as a company to shift our practice from Microsoft Dynamics to Acumatica ERP. Today, we exclusively help customers adopt Acumatica ERP into their business practices. With the change from Dynamics to Acumatica ERP came a big shift in how we chose to provide services to our clients. That shift is now what Acumatica calls the "Modern VAR" (Value-Added Reseller), and shifts services offered from a fixed-bid or time and materials statement of work into a services-based subscription.
Whether your are an Acumatica VAR or an Acumatica Customer/End-User, a subscription-based services model provides benefits to both parties, including encouraging customers and VARs work more closely together throughout the life of the software subscription.
Why ERP professional services as a subscription? The entire premise for offering services and bundling them along side the software subscription as a service is based on this single statement, "Success with an ERP is a journey, not a destination". In order for a company to be successful with an ERP, their ERP must continually evolve as their company evolves, changes, and adapts over time. Given the complexity of ERP software, this not only applies to the software publisher (i.e. Acumatica) to continually improve the product, but also applies to the VAR to continually provide the services needed to help the adopt these changes, or reconfigure the existing software to meet new or changing business requirements. By aligning services into a subscription, it completely changes the dynamic of how resellers interact with their customers, and encourages continual improvement of the ERP over time. The paradigm shifts from a large upfront implementation to many and much smaller engagements that occur over time.
The traditional model used by professional services companies looks like the following:
What are the problems with the Traditional ERP Implementation Model?
Slow Implementation Times: The average implementation in this model is 6-12 months or longer. You may be paying for an entire year of license subscription and not start using the ERP software until the end of the first year or sometime during the second year.
Slow Return on Investment: The typical return on investment in this model is 18-22 months. That is a long time to wait before a company starts seeing the value of the ERP within the organization, and is a significant impact to a company's cash flow.
Large, Upfront Costs: Licenses are typically paid on an annual basis and are paid at the time of signing. Implementation services are typically 1-3 times the first year's license cost. This results to 10s or 100s of thousands of dollars the first year, and most of that cost is incurred before you start using the new ERP. These initial costs can prevent growing companies from being able to adopt ERP due to budgetary constraints.
Poor Knowledge Transfer / Slow Time to Resolution: The team that implements your software is usually not the same team that helps support it. While its true that some service companies share these resources, often times the support team is at a disadvantage since they are not the same ones that configured the system. This results in a slower time to resolution and a poor customer experience once customers start using their new ERP.
Nickel and Diming: Every time you need something changed or want something new, be prepared to pull out your wallet. This may hinder or even hold back company performance due the inability to find budget to do make changes as a business evolves over time.
Lack of Service / Support: When professional service companies are making most of their services revenue from the initial implementation, services provided after launch may be mediocre or non-existent. This is because service organizations will put their better resources on the initial projects. This also results in a poor customer experience after launch and often times frustration for the customer.
Premium Support Fees: If customers want to get the premium attention and the support they deserve, they often have to pay extra fees to get it. That includes fees for any type of support, as well as premium fees for access to a real person or a dedicated person like an Account Manager.
The services-based subscription model (or what we call the Continuous Engagement Model) is quite different:
The big changes to the model are as follows:
Everyone has an Account Manager: An account manager is assigned from the very first day of service and continues throughout the life of the software subscription. This provides customers with a single point of contact. All services are coordinated through this one person, and different team members are pulled in as needed based upon the skills needed at different points of time. The account manager learns everything about the customer's system, and is better positioned to help the customer both before and more importantly after launch.
Introduction of the Backlog: All business needs, desires, and wants are documented and listed in a backlog, that is continually prioritized and groomed over time. The backlog drives what is done next, and allows work to be broken up into lots of little projects (or engagements) instead of one large upfront implementation. The backlog is divided into items that are critical vs. non-critical for launch as well as items that are "need to have" vs. "nice to have". Timelines are also established on items. This allows the most critical items to be prioritized and completed first, allowing the customer to launch their ERP into their business environment as a Minimal Viable Product (MVP), which is then continually improved and modified over time. Once an engagement completes, the very next engagement begins. Its even possible for multiple engagements to run simultaneously.
What are the advantages of the Continuous Engagement (Subscription-Services) Model?
Faster Implementation Times: Because we are building a backlog and are focusing on the Minimal Viable Product (MVP) to launch, the average initial engagement to launch the software is reduced to 3-4 months (90-120 days). Note this doesn't mean that once you launch the services stop, it just means that enough of the ERP is operational to allow you to start using it and the other parts of the ERP are setup over time. This has an added advantage of allowing you to actually get into the system and start using it, which only then do you truly find out what you want and start reshaping your backlog.
Faster Return on Investment: With a subscription-based approach to services, our customers see a return on investment in as a little as 4-6 months. This is because they launch with the software much sooner and start to realize value and savings from the ERP. When done correctly, an ERP should more than pay for itself.
Smaller, Reduced Upfront Costs: Because services are offered as a subscription, the initial setup and support fees are covered. Instead of paying for all of that upfront, its paid over time. Our services subscriptions include the basic setup to get each ERP software module operational, and we only charge for extra services that fall outside the selected subscription. Plus, we structure our services subscriptions into monthly payments instead of annual payments. This is a significant improvement to cash flow and reduces the barrier of entry, allowing companies to easily onboard to ERP without the large upfront investment. Of course, you can still pay for your licenses and services upfront if desired depending on your financial situation with additional discounts applied.
Continual Engagement/Improvement: Business needs change over time. Even the things that you may have thought you wanted when you first purchased the ERP change over time. By continually engaging with the customer and making small incremental changes to the system over time, the configurations and customizations truly align to the business needs at the time that they are needed most.
Single Point of Contact / Better Customer Experience: Since every customer has their own Account Manager that not only knows everything about their system, but also knows how their customers run their business, it gives customers the best possible experience and the level of support the expect with such a large investment.
Faster Time to Resolution: Because the Account Manager is the primary point of contact for not only engagement work but also support, the Account Manager can pull in the resources they need when they need them. When combined with the intimate knowledge of that customer and their ERP configuration, it significantly decreases the time to resolve any issues that may arise.
So there you have it. The definition and benefits of Subscription-Based ERP Services and the Modern Value-Added Reseller (VAR). If you are interested in Acumatica and engaging with us as a Modern VAR, or would like to learn more about our Engagement Solution Provider (ESP) program for becoming an Modern VAR, please contact us by emailing hello@eis.consulting or calling us directly 833-347-5190. We look forward to hearing from you!
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