Channel Development
Experiences and thoughts

How does Openbravo make money?

Tuesday, May 6, 2008

Being a channel manager (as you might know in channel management we are responsible for the growth of our partner network), this is a question I get many times. It is quite logical that this question frequently comes up, since we are not charging any license fees for our award winning ERP solution. Moreover, we are not distributing the solution as a “black box” of which you have no idea how it is working (if we would do this and in addition charge license fees it could also be called a proprietary model ;-) ), yet in our case anyone can see how the product has been built because the source code is visible and readily available through a download from Sourceforge. In addition, all documentation about the product we have is published and freely available through our Wiki. Therefore, I can understand where the question comes from.

Many know that Open Source (OS) is a business model under which applications are developed and commercialized on a way that is revolutionizing the software industry. All OS companies tend to have different strategies of monetizing on the dissemination of their product, but most have one thing in common: the delivery of services.

Openbravo is no different in this way; the sale and delivery of services is our primary source of revenues. Services that we offer cover anything a partner might need to be successful in selling and implementing Openbravo solutions (ERP and POS). Some service types are fee-based, like training - support - custom development - consultancy, and thus provide an important source of revenues for our firm.

To grow our business we count with our network of partners who implement Openbravo for their clients. Our recently launched Openbravo Network has been offered in addition to the existing free community edition. We are convinced that Openbravo Network is an innovative solution offering the first real subscription-based “ERP-in-a-box” solution at a competitive price that enables partners to increase their economic returns with a “peace-of-mind” offering for users, while also generating further revenues for Openbravo.

So if I would have to answer the question in the title of this post in one sentence it would be: “Our success depends on our partner’s success”. If our partners do well in building a successful business around Openbravo, we will also do well as a company. That is why we put so much effort in delivering high quality and specifically designed services.

Do we make money? Yes we do! Our partners are quite successful in building an ERP practice with our product. One of our Dutch partners told me that they on average receive one call per day from a potential client. This is a great example of the market opportunity in the ERP space and the dissemination power of Open Source.

So if you work at, or for that matter own, an IT company and are interested in growing with us do not hesitate to apply for our partner program. We will contact you shortly after registration to evaluate if there is a fit between our companies.

Exploring new virgin and risk-free seas as a way to increase net profit

Tuesday, March 11, 2008

I know several people that are thinking about the option of starting up a new company to develop an ERP business practice. My suggestion to them would be, not considering some minor exceptions, to definitely think twice before partnering with a proprietary vendor. The CeBIT is over. It was an exhaustive and intense 6-day fair. As expected, we took back home several different memories with us. However, there is one which I would somehow call “surprising”: at the stand for one of the top proprietary ERP vendors I saw two sales representatives “fighting” each other and discussing about who should be the one to talk to the end-client even before listening to the end-client needs. Obviously, each sales representative was defending a different solution. Next to them, some other partners were fiercely competing with peers to attract the attention of end-clients passing by with the main goal of being elected as one of the four or five parties that would probably meet each other in the next phases of the evaluation.

I perfectly “understand” why do IT consultancy companies stay “loyal” to their proprietary vendors: they are making a lot of revenues thanks to the licenses end-clients are paying to be eligible to use vendor’s software! However, they usually struggle when trying to make their practice grow year-over-year or trying to get more than just a 5% profit margin. Why not considering an alternative or a compliment that would easily help them to skyrocket their revenues and margins? Professional and competitive Open Source ERP solutions are already a reality that cannot be denied, but there is still an incomprehensible fear and reluctance to adopt these. I am amazed to see that most partners of proprietary vendors still prefer to swim in a red ocean infested of sharks rather than to explore new virgin and risk-free seas. Should not the second option be far more attractive than the first one? Just a thought…

Time has come for a new initiative

Thursday, February 28, 2008

“Why don’t you write about Channel Development?”, asked me the other day our CEO. “I probably should”, I thought. It was not the first time someone had asked me the very same question. Some potential partners, community members and other software vendors had done so in the past. They were wondering why such an interesting topic was missing in Openbravo planet. The reason: I just simply did not have enough quality time to talk/write about it (you know, time constraints related to any start-up).

I personally joined Openbravo back in December 2006 to lead partner network expansion throughout the world. At that stage, we just had a few “friendly partners”. There was no partner program but a “friendly pack” offer only. Then, the purpose was to make sure that both Openbravo ERP as well as some of the professional services we had thought of were ready for the partners to be able to develop a successful business practice around our solution.

Today, our partner network is constituted by more than 65 partners covering more than 50 countries, and growing. We have a unique 100% quality based partner program in place (which by the way, is about to be revamped and significantly improved) and a professional edition - Openbravo Network is its name - which should significantly help everyone in the business to scale revenues and build a very profitable business practice while providing a much more attractive value proposition to end-clients (e.g. providing bug fixing guarantees around the leading web-based Open Source ERP solution).

And last but not least, team now is larger (and much more international by the way), which provides me with enough confidence so we (not only I but all the team) can launch this new initiative: “Channel Development: experiences and thoughts” blog. It is not only going to be about Channel Development but also about our Partner Network, one of the most important assets that any company in the space might have... along with the product and people of course.