This week I’ve talked to several members in our community of practice who were all of the impression that CMS licenses can only be bought from system integrators. This is undoubtedly in the interest of your system integrator, but for the vendors I cover, you can buy the software directly from the vendor as well. In most cases this will be to your advantage.
Most recently a customer of Danish CMS vendor Sitecore told me that they had fired their system integrator and were now dealing directly with Sitecore. For a small additional sum the customer now had direct access to engineering and support. Interestingly Sitecore pride themselves on working exclusively through partners. To quote the Sitecore website:
Sitecore is completely dedicated to the Partner channel and has developed a program to maximize profitability for Partners with Sitecore solutions
In another case, Swedish CMS vendor EPiServer teamed up with their system integrator to try and convince a prospective customer that the system integrator was responsible for delivery and should therefore also be responsible for license delivery.
Apart from my usual concerns about corruption, here’s why you should buy your software licenses directly from the vendor:
- it will be easier to divorce your system integrator
- closer relationship with the vendor, potentially with better support and direct engineering contacts
- increased likelihood of getting a better price as you take out the intermediary
The only disadvantage is that this might take some escalation and negotiation. Also, your system integrator might be left unhappy, but remember that the customer is always right. Right?
Jon Marks May 20th, 2009 17:46
I’m not convinced I agree with this. But, being an SI, I probably wouldn’t. I prefer a vendor that is genuinely “Partner Channel Only” that never engages directly with a customer to one that claims to be “Partner Channel Only” but does shifty deals on the side. I do agree that the license should be, where possible, direct with the vendor. EPiServer never sell direct to customers as far as I am aware. The example you give is consistent with their partner model, and I don’t think it is a problem.
But maybe “partner channel only” should refer ony to the development / integration / services work, and exclude the licenses. I stand corrected, but I’m reasonably sure that when we buy a license on behalf of a client, the relationship does become direct between the client and the vendor. Sure, we might get a kickback (see your ethics post!) on the initial sale if we’ve helped to sell it, but the maintanance/support goes directly to the vendor and the client has the relationship with the vendor support/PS team. It shouldn’t be an obstacle to the divorce.
Sten Vesterli May 21st, 2009 17:46
Joe is right that the license relationship should be directly between the customer and the vendor. I know for certain that this is the case for Oracle (I’m an Oracle partner and SI).
Of course you need to be able to contact vendor support directly, but you can also choose to let your SI handle any support interactions with vendor. I think your SI (with many implementations under his belt) is actually _more_ likely to achieve excellent vendor support or have direct engineering contacts.
I don’t think there will be a price advantage – as an SI, I look at the total engagement. If I can sell some licenses at a profit, I am better able to give a good price on the implementation. If I don’t get the license profit, I don’t have any scope to reduce the implementation price.
Martin Edenström / MKSE.com May 22nd, 2009 17:46
But buying and maintaining the EPiServer license isn’t really the same thing, is it? I believe clients have the same “freedom” as when they purchase the license through a parther.
As you’re all aware the amount of sold licenses are also vital when nominating premium partner status. Which is the best sign for clients curious about who to work with.
Michael Jäderlind May 22nd, 2009 17:46
Hi,
Thanks for an interesting perspective on licensing and support issues regarding CMS’s. As a Premium EPiServer Solution Partner I have to disagree. First of all when it comes to pricing. In a highly competitive market the vendor kick-back is often included in the overall project budget. So the client will eventually pay the same regardless of the way they purchase their licenses. Second. With EPiServer there is no problem to divorce your integrator as long as you start working with another EPiServer Solution Partner. And why wouldn’t you? After all the system integrators invest a lot in Competence Development for their employees working with the different CMS Platforms. Third. In the end you wouldn’t get better support as the CMS company has to build in several layers in their support process to cover for all the support now given by integrators. Eventually you’d end up with support less interested in you and your project and more interested in covering the ever increasing support costs from less initiated and (in the CMS) educated clients.
Best regards
Michael Jäderlind
CEO Nansen
Paul Markun May 22nd, 2009 17:46
Sitecore (for whom I work) does not build final website solutions for customers- either the partner does, most typically, or the end user chooses to do so themselves. Most if not all other significant Web CMS software companies do try to take this role on, but Sitecore believes partners are vastly superior in this role.
The good news for both partners and End Users is Sitecore does support the Web Content Management software that we manufacture- and support it very well. However, the website solution that our partners or end users build- those customizations, that flash, those integrated databases- that is theirs to support. Simply said, we support what we make and the parts created by others is for them to support.
Consider the iPhone. Many things go into allowing that cool device to work. But if you get a busy signal, do you call Apple? If your headphone only plays in one ear do you call your local Telco? And to sync the email with your corporate Exchange server, who do you think you call? Why the person responsible for that piece of the technology puzzle.
I bring up a popular everyday consumer device to illustrate that technology support from the appropriate party is a frequent decision made every day by nearly every person. In the end, the iPhone is a solution, just like ones website, and we all want the best provider of each part of the solution to stand by what they make.
Janus Boye May 23rd, 2009 17:46
A few comments have said that customers can not expect cheaper licenses, just because they buy directly from the vendor.
Sten said:
“If I can sell some licenses at a profit, I am better able to give a good price on the implementation. If I don’t get the license profit, I don’t have any scope to reduce the implementation price.”
while Michael said:
“the vendor kick-back is often included in the overall project budget. So the client will eventually pay the same regardless of the way they purchase their licenses.”
My advise to customers would be:
- if you buy via a system integrator, you can hope that they will reduce the implementation price based on their kick-back, but unless you get competitive bids from other SIs you don’t really know whether they are milking you
- if you buy directly via the vendor, you can look at the list price and try to negotiate a better price. then get competitive bids from SIs and pick the best one (not necessarily the cheapest one)
It is your call!
Christoph Mause May 27th, 2009 17:46
Janus – I totally disagree. We’re a leading European SI for OpenText Web Solutions, Sitecore and eSpirit and your posts are pointing in the false direction.
1. Customer / SI should establish a thruthfully relationship. That includes discussion about price structure, services, support etc. If you state “you don’t really know whether they are milking you” I guess you have the wrong idea of a customer / SI relationship. If we work for a customer we try to get the best value for the customer as possible because we than can work for this customer for a long time which is more important than short term sales profit on licences deals.
2. If you buy your licenses directly from the vendor you never ever get better prices than we get from the vendor. The truth is, that the vendors sales people just get a higher profit. If we deal with a customer we only look on the total engagement – that means you do not have a price advantage dealing with a vendor and a SI separately as you state in your last post. Of course you can squezze out the vendors sales rep and than the select the cheapest SI – good luck
3. Another fact is that vendors sales people often sell licences and modules to the customer which are not needed or can easily be required in a second step. If we sell licences we always have the complete solution in mind and are held responsible for the solution. Next time you try to ask the vendor sales guy why he sold you this stupid Portal connector you often have to talk to his replacement.
4. Service and Support – as Paul noted most of the implementations are custom made projects. The vendor usually only supports his system – but at the end if you have a problem with your project it is often a combination of functonality, implementation and operating errors. No vendor support will help you in such a case.
5. In fact we’ve learned in the past that if your system vendor has a major problem with his software the only one who will help you is your SI. We provide a lot of unpaid support for our customers fixing issues with the software, getting in contact with the vendors development team, handling ticket support and even escalating serious problems to the executive management of the vendors. From over 15 years experience with CMS vendors I can tell you that the customers with the biggest problems are the customers who directly dealt with the vendors.
6. Last not least the “kick-back” isn’t just another profit optimisation. Most of the serious SIs I know invest that money in trainings, competence building etc. And yes – the more you sell the better is your partner status. But on the other hand that also means that a Premium Partner invests a lot of money in education and competences. We are a Premium Partner of the OpenText Web Solutions (formerly RedDot) and we have over 40 trained developers – most of them on several components, certified etc., we have our own service and support team, a complete range of development servers for each single version released in the last 5 years etc. pp. – that investment is partly financed with kick-backs form licence sales – and the people who profit the most from that are our customers.
I truly can advise customers to have a closer look on the vendors partner list, invite the most promising two or three, talk to SIs references and than select a partner who do you trust in and who do you believe will be the best to help you with your project. And then negotiate the price.