The Anatomy of a SaaS Reseller

We recently signed up our first official reseller. We partnered with a company named Cloud Sherpas, one of Google’s top resellers. Although we’ve only been working together for a month, the relationship is off to a great start as we’ve been able to train and integrate our sales and support processes and have a healthy pipeline building.

Through my years at HP, BroadVision, Salesforce and SuccessFactors, I have worked with resellers of all shapes and sizes. Some worked well, some not so well. It wasn’t until I became VP of alliances at almost 10 years ago that I realized how different the DNA of a successful SaaS reseller really is.

As we went through setting up Okta’s Cloud Sherpas relationship, I reflected on some critical elements that make a successful cloud reseller Cloud Sherpas has all of these characteristics.

1) Long term view of their customers. This sounds fairly obvious, but so many resellers are only thinking about short-term margin. We used to affectionately refer to these folks as “box pushers.” You can smoke these folks very quickly. They tend to start the discussion off by negotiating margins and trying to optimize on short-term payouts. The reality of SaaS is that the first year of a customer relationship is usually the least profitable. You have your highest cost of sales upfront, but customers become more profitable over time. Cloud Sherpas understands this model well. They are very long-term focused in their thinking and in their current business model. Today, Cloud Sherpas resells Google Apps and provides services to cloud adopters. Both attributes make them ideal partners for Okta’s Cloud Identity and Access Management Services.

2) Domain Expertise. Selling SaaS solutions requires a different skill set than packaged software or hardware. If your reseller is not set up to sell SaaS or, at a minimum, services for SaaS solutions, you face a steep education curve — not just from the technology and selling point of view, but getting the partner to understand the innate differences in how to comp and incentivize their reps. Even vendors who are “hybrid” and offer SaaS versions of their products struggle with this. It is very difficult to sell with on premise vendors or hybrid vendors who have not really fully adopted the religion. Joint presentations in front of customers don’t flow. Objections are handled differently and sometimes in conflict. Understanding not only your products and business, but also your model, is very important. Cloud Sherpas is experts in Google Apps and helping customers deploy Google solutions. All they do is cloud, and they help their customers become successful day in, day out.

3) Complementary businesses. For a relationship to work, you need to complement each other. Your products need to fit with each other. You can only expect 5-10% mindshare from your partners. Your offering needs to add value to their customers and to their offerings as well. Cloud Sherpas sells to IT and business executives that are taking a huge step forward into the cloud by moving to Google Apps. For some of these companies, it is their first cloud solution, while others have many SaaS apps already deployed. Okta helps Cloud Sherpas’ customers by providing Single Sign On and User Management across Google and all of the customers apps. Cloud Sherpas helps Okta by expanding our reach to new customers and supplying valuable expertise around a very core cloud technology.

4) Culture. This is by far the hardest attribute to pin down. There are a lot of intangibles that you learn only by spending time with not only the management, but also your partner’s employees. A reseller relationship doesn’t work by just signing a contract and throwing collateral over a fence and crossing your fingers. Cloud Sherpas’ employees have fully embraced Okta, and we have fully embraced Cloud Sherpas. We are collaborating across sales, support, marketing and our respective product teams. We see a company much like ourselves.: Customer success-focused with a work hard, play hard culture. A perfect match.

I am very excited about Okta’s new relationship with Cloud Sherpas. By all counts, they have all the makings of a great partner. Their name is very appropriate. Cloud Sherpas has formed their business around helping companies move to the cloud. Okta is trying to make the cloud easier and more efficient for both end users and IT organizations. We are at the beginning but have high hopes for a long and prosperous relationship.