The OEM Partner Revolution for SaaS and On-Premise Software

March 3, 2016

Category: Development

“We have an integrated partner to do that”  

For most SaaS and On-Premise software companies an “integrated partner” provides complementary or even critical functionality to the their software product.  But, this “integrated partner” is a separate software company…. and it often shows.   If the buyer is lucky, the integration is accomplished via iframe.  This “embeds” part of the partner’s software into the SaaS or On-Premise product.  While functioning natively, it can lack elegance and still require time in the partner’s user interface. More frequently the buyers are not so lucky.  In those cases we are literally talking two contracts, two invoices, added implementation costs, two user experiences, two SLAs, two technical support numbers, and an even more cumbersome user experience of jumping between systems.  Ugh.

Good news, the days of the SaaS and On-Premise “integrated software partners” are numbered. Forrester Research says 73% of C-suite executives consider enterprise application consolidation a critical priority.  Buyers want to work with less software companies for the above reasons, and users want the consistency of a single software experience.

The API economy as a notion of broader software interconnectivity made available via PaaS and micro-services is a significant opportunity for software companies.   

The “integrated partner” is giving way to the OEM partner.

An OEM partner is chosen for their unique, best of breed functionality to fill the requirements of a larger software product.

An example of the OEM partner relationship is the cloud offerings of Uber, Google Maps, and Intuit. Uber hires and manages drivers better than anyone in the world. They are a software company by necessity and have no interest in being a map builder like Google.  But maps are only part of the picture.  Tracking earnings is a critical requirement for drivers and Uber offers Intuit to accomplish this.    A great example of how OEM partnerships provide best of breed functionality within a larger product offering like Uber.

This is C-suite heaven, best of breed software companies under one user experience.

An OEM partner provides a software company the chance to focus on their core product while still moving quickly with innovation.  Further, costs are controlled via an OEM license versus the resources required to build the software from scratch.  

For the established On-Premise software manufacturers, contemplating a move to the cloud is a big project.  Yet, more clients and prospects expect a roadmap that includes it.   An OEM partner arrangement is a great way to begin the transition of On-Premise users to the cloud.  The flexibility of a good cloud-based OEM partner allows for UX development to match the existing On-Premise. Users can be moved seamlessly between the two environments.  Implementing this type of an OEM partnership can be fast and cost effective.  For these companies, client retention is a must and innovation is a good approach.

OEM partnerships done right mean software companies are working in concert and offering a consolidated enterprise application for the buyer’s C-suite. The C-suite signs one contract and the users are offered a single experience.

Soon software companies will be saying, “We have an OEM partner for that.”