openerp-community team mailing list archive

[Fabien Pinckaers <fp@xxxxxxxxxxx>]

Hi Dusan,

> Fabien wrote that all revenue for OpenERP is from 30% of partners , but
> what is more important is that IMHO 99 % of revenue comes from just few
> countries.

Like most companies, we follow the pareto principle in our revenues.
But, as an opposite to most services companies, the long tail is quite
important for OpenERP. Our revenues are largely spread over a large
number of countries. For EMEA, our top 5 countries does only 60% of our
revenues.

Since the beginning of OpenERP, we follow a global strategy; every
country / every partner is important for us to build a global product
and service offer. --> We try to cover a maximum of countries in
everything we do (CTP in 26 countries, Partners in 110 countries, Event
Tour for Q1 2014 in 30 countries, Certification center in 190 countries,
...).

> I put 4 people full time on the OpenERP project for last 2 years . We
> done 90% of translation ,contributed official localization(l10_si),
>  developed about +50 modules (https://launchpad.net/openerpsl) which
> about 50% are for localisation
> and implemented first projects ( with huge effort (localisation
> problems) and the price that didn’t cover our  expenses).

It's clearly highly valuable for OpenERP. It's great to see such
contributions and people trusting in the project. Building such a global
product and service offer is a huge effort for everyone.

We definitely need partners to develop new countries or improve existing
ones.

> And now we are 'bad' partner , because we don't sell SAS or Enterprise.
> There is nothing to sell here for OpenERP or any Partner without good
> and well maintained and supported localisation.

Sorry if I was not clear in my preceding email. We do have very good
partners (mostly silver and gold ones) but we never think about "bad"
partners.

Every partner is important for us. We always support every partner, we
always act globally,

OpenERP has two hats:
1/ building a great open source product
2/ building a great business

For 1/, everything related to the product or the community (bugs,
translations, launchpad collaboration, ...), we don't even do the
difference between community, partners or what ever. Every one is equal
in their contributions. Our developers don't care about the status of
someone when they merge branches.

For 2/, we rate partners according their performance in developing
business (ready, silver, gold). Mostly because customer want this (big
projects search for highly experienced partners) and because it allows
us to adapt the investment we do per partner.

But, for us, a ready partner is NOT a bad partner. A ready partner is a
future silver or gold ones. So, we do what we can to help them grow.


In our point of view, being a great contributor and being a great
partner is two very different things. You can be a great contributor but
not a partner. (you develop modules, but don't develop the business) Or,
you can be a great partner without being a contributor (you develop a
great service offer but don't contribute a lot)

Of course, the best is when you are both. (because contribution means
short-term improvements and business means long-term sustainability)

We even have two different teams to interact with community or partners:

- Our R&D team work with contributors (and they don't care about who is
partner or not)
- Our sales/account managers/services team work with partners, and they
don't care about who is a contributor or not.


> I won't go in details with problems we are dealing with  entering new
> market (i mostly agree with what Raphaël Valyi and António Sequeira
> wrote in this thread ) , but I strongly believe
> that OpenERP need some local partner in every country (localization ,
> bug fixes for localization , local support  ) and I don't think they can
> do that by themselves for all countries.  

I fully agree too. (and we don't want to do this by ourself, it's not
the strategy of OpenERP).

> We hope OpenERP s.a. will realize that they need much more flexible
> partnership and pricing model if they  want to enter to majority of
> countries where OpenERP has just a lot of downloads and
> maybe some optimistic ready partners.

I think our partnership is super flexible: open to everyone, not
expensive, no constraints at all (no revenue, communication or others
constraints, ...), adapts to partners growth and needs (ready, silver, gold)

I think our pricing is super accessible. Here is a comparison per month
and per user:
  - OpenERP:   35€  (includes migrations)
  - Openbravo: 39€  (no migration included, no "unlimited" bug fixes)
  - Netsuite: $100/user
  - Compiere: $65 - $115
  - XTuple  : $90 - $215
  - Sage :    $90 - $200
  - Ms. AX:   $180

Not only, we have the best product, but it's also the cheapest!

About the flexibility of the price (adapt to every country), it's
different as we only have 4 prices for 4 different regions. But most of
the publishers have this, otherwise it's too complex and not manageable.
For the pricing, it's super complex to be flexible, but you can always
discuss with your account manager and we review every demand case by case.


> I hope we will persisted and succeeded in make  OpenERP a successful
> product in Slovenian market and than we or some body else can sell
> contracts or SAS.

I hope too :)

> Until than:
> Best regards from 'bad guys ' !

No, I repeat, we don't have "bad partners". From OpenERP SA's eyes, you are:

1/ A great community member (R&D Team point of view)
2/ A ready partner that will become silver or gold (Account Managers
   point of view) --> which is good too.


Thanks for the feedback,

Hope our point of view is more clear,


Fabien



> 
> )
> On 02/25/2014 07:43 PM, Fabien Pinckaers wrote:
>> OpenERP Enterprise
>>
>> Eric and All,
>>
>> Thanks for providing such a feedback. I read all mails and I will try to
>> answer everyone's question here.
>>
>>
>> *Why is OpenERP Enterprise Key for OpenERP?*
>>
>> As an introduction, OpenERP Enterprise is key for OpenERP as it finances
>> all our R&D and marketing investment. The OpenERP Enterprise service
>> offer is what allowed to release v6, v6.1, v7, v8, and future ones.
>> Building an exceptionnal product requires to invest a lot in R&D, which
>> is very different than building new features on top of customer projects.
>>
>> If we would not have invested in R&D, OpenERP would still be like this:
>>   http://www.cyclaero.com/OpenERP/OpenERP5-screenshot.png
>>
>> In others words, OpenERP would be dead as it could not compete with
>> existing players. And most partners would have left OpenERP too as
>> OpenERP services companies were not profitable on versions 6 or earlier.
>>
>> OpenERP Enterprise is key for customers too. In the past, with SAP or
>> others, customers used to buy one version of a product and stay with it
>> for 7 years.  They never upgrade and, after 7 years, they are so
>> deprecated that they usually completly migrate to another software. I
>> want to build a service where customer evolve with the software, where
>> they can benefit from new features frequently and where partners grow by
>> selling to existing users, not only to new ones.
>>
>> I want to build long term relationship with our users where migrations
>> are not a technical pain, but where an upgrade to a future version is a
>> way for customers to benefit from lots of new features.
>>
>> For new community members, you can learn our business model in this 3
>> years old post:
>>     http://v6.openerp.com/node/465
>>
>>
>> *Why is it super hard to have such a business model?*
>>
>> We invest more than 45% of our charges in the product and it's super
>> important to keep such a high ratio for the future of OpenERP. (mostly
>> in R&D, but with a bit of marketing too) To sustain publisher
>> activities, as our cost of sales is ~30%, it means we need a service
>> with "75% gross margin" to be break-even.
>>
>> Such a business model is SUPER HARD.
>>
>> It's not possible to sustain a R&D department with services like
>> consulting, support, development, training, etc. as these services do
>> not allow 75% gross margin.
>>
>> As we don't want to sell licences (proprietary models easily allow 70%
>> gross margin), the only solution we found without crossing the "non open
>> source" line is what I would call "One 2 Many" services. Things we do
>> once but provides a value for several customers. This allow us to
>> leverage the size effect.
>>
>> Maintenance is the best example of One2many services:
>>   - bugs are fixed once for everyone
>>   - upgrade costs a lot for the firsts 100 customers but then it's less
>> than 4 hours of work per customer.
>>
>> The service is also SUPER HARD to deliver at a low price (unlimited
>> maintenance tickets, upgrades at no extra costs). No other publisher in
>> the world has such an offer. In all others ERPs, upgrades costs 10x the
>> price we charge with OpenERP.
>>
>> The good news is that we succeeded this super hard challenge as we are
>> break-even (but it costed us a few millions eur to deploy the model)
>>
>>
>> *What's the current status?*
>>
>> OpenERP Enterprise is a great success: 1000+ customers, 50% of our
>> current revenues, 84% gross margin, only 13.07% annual churn [1], 84%
>> growth YoY, ~600 db upgraded in 2013.
>>
>> Having only 13% churn is incredibly good. It means that a customer who
>> choosed OpenERP Enterprise stays on average 7.7 years with us. The
>> reasons why customers stop subscribing to OpenERP Enterprise:
>>   - 5.25% Don't Use OpenERP: project failure due to partner/customer
>>   - 3.41% No value perceived
>>   - 0.71% Unstatisfied by service
>>   - 3.63% Financial issue (no more money, includes customer/partner
>> bankruptcy)
>>   - The rest renew their OpenERP Enterprise subscription after one year
>>
>> But we also had some failures, mostly in getting new customers. Once a
>> customer purchased the service, they mostly stay with it. (87%, which is
>> more than ok)
>>
>> For getting new customers, I would say our main failure is the value
>> perceived BY THE PARTNER. We still have a lot of partners (I would say
>> 30% but I have no exact number) that don't sell OpenERP Enterprise for
>> different reasons.
>>
>> This is not a critic of the partners as I know it's not easy to
>> understand the value and how to benefit from it. I had the same problems
>> with our own sales 2 years ago, they always tried to apply big discount.
>> Now we solved this for our sales.
>>
>> Over the past years, we didn't try to fix this and we focused only the
>> good partners. (70% of our revenues are done by only 30% of our
>> partners) Our way to solve the problem was to redirect all our efforts
>> on good partners (leads, time spent, public visibility, ...).
>>
>> But I think we can now improve and openly discuss so that we try to fit
>> everyone's need.
>>
>>
>> *What are the values of OpenERP Enterprise?*
>>
>> OpenERP Enterprise's values are:
>> 1/ upgrade to future versions
>> 2/ unlimited bugfix guarantee
>> 3/ ability to merge bugs in stable branch
>> 4/ private use clause allowing not to redistribute your customer code
>> 5/ two hours of support
>> 6/ Access to our top ressources
>>
>>
>> Value 1, upgrade, is super important to everyone: partners & customers.
>>  Customers because he benefits from new features frequently and partners
>> because they can sell more services for these new features.
>>
>> Value 2, is more complex. It's a real value for customers but not for
>> partners as partners sometimes prefer to charge man*days to fix issues
>> on projects. It can be a value for partners if they are on fixed price
>> rather than time and material basis.  Most open source companies
>> (including ourself) try to do everything on their own instead of relying
>> on someone else. I saw A LOT of customers that paid A LOT to partners
>> for things that are covered by OpenERP Enterprise for less than half the
>> price they paid!
>>
>> Value 3, is not important for customers but is improtant for partners if
>> they think for the long term. Some partners prefer to just have a short
>> term vision and think it's not that important to merge their fixes in
>> the stable branch.
>>
>> Value 4, is only important for big customers having a legal department.
>> The others cheat and prefer to be illegal by not redistributing their code.
>>
>> Value 5, is a low value but helps new customers as we handle their first
>> issues even if it's not a bug. It's improtant because some customers buy
>> an OpenERP Enterprise because they just have one annoying blocking point.
>>
>> Value 6: OpenERP Enterprise customers can subcontract our ressources to
>> help on the project on key aspects: scalability, analysis, ... That's
>> very important for some customers/partners but we charge this in extra
>> to less than 10% of our Enterprise customers.
>>
>> *What are our main problems?*
>>
>> We have mainly two problems with the current situation:
>>
>> 1/ Our OpenERP Enterprise service is visible ONLY by the partners as
>> it's technical stuff and, when the customer need our services, the
>> partner is the only interface. We should make our services become a
>> value and visible by the end-user.
>>
>> 2/ Our success on OpenERP Enterprise is due to 30% of our partners
>> (mostly the silver and gold ones) but for the other 30% of partners, the
>> partner is a real problem as he is the blocking point to the sale.
>> (willingly or not)
>>
>> 3/ Work on the perception of the service. Our marketing sucks. We don't
>> even have a clear product sheet. If you sell migrations, for sure nobody
>> will want to buy it. Migrations are painful and costly. If you sell
>> upgrade to benefit this X new feature, it's a great offer.
>>
>>
>> *How can we improve the value of OpenERP Enterprise?*
>>
>> Things we will do:
>>   - reach excellence in our services
>>   - make the service become more visible by the end-user: integrate the
>> service in the application (e.g. livechat), follow of upgrade or bugs
>> status, ...
>>   - integrate a strong support offer as an option (not only maintenance
>> but also 24/24 unlimited support for use and configuration)
>>   - work on the perception (marketing investment)
>>   - invest in sales (help the partner close deals to secure the Enterprise)
>>   - stop the 2 hours of support and work on a great service: unlimited
>> or nothing
>>
>> Things that could work but I would like to avoid:
>>   - don't release bugfixes publicly (only for customers)
>>   - don't release new developments (an open core strategy), e.g. we
>> invest to clean accounting and we charge for these modules in v8.
>>   - skip the partner and sell directly (at least for bad partners)
>>   - stop partnership with partners that don't generate revenues but
>> costs us money
>>
>> I would be very happy to add a high value service in OpenERP Enterprise
>> if we find one. But I would like to avoid adding small services to it
>> (the sum of small valued services do not make a great service). It's
>> better to do one thing perfectly rather than bundling lots of different
>> services in the offer.
>>
>>
>> *Misc notes*
>>
>> Some complains about the price. For me, it's not an issue. OpenERP is
>> already cheaper than the competition and we offer more services as
>> others don't include the upgrade in their maintenance contract. If some
>> complains about the price it's because the value is not understood, not
>> because the price is too expensive.  I prefer to work on the value
>> rather than de-valuing our offer.  If the offer is not proposed to the
>> customer efficiently, for sure he will consider it's too expensive.
>>
>> I will not decrease the price of OpenERP Enterprise as: it's impossible
>> to offer such a service for cheaper than that. I actually would prefer
>> to increase the price and increase the quality of service accordingly.
>>
>> Interestingly, when we sell directly, we sell at 35€, with a maximum
>> discount of 10%. We have no problem with proposing that and it's always
>> accepted by the customer. Some partners have difficulties to resell it
>> at 17.5€ we have to work on this.
>>
>> For big projects (>50 users), we always accept to negociate case by
>> case. So, the pricing is not an issue as we are quite open. One of our
>> internal rule to check if our pricing is not to high or too low, is to
>> say that 15% of the project value is a fair price:
>>   - partner get 85% of revenue for its implementation services
>>   - OpenERP get 15% of revenue for maintenance services
>> We are sometimes higher, sometimes lower, according to the project, but
>> it gives you an idea.
>>
>> I don't like to split migration and support because I only envision
>> customer relationship in the long term. If the customer have to pay to
>> upgrade, he will try to avoid it and it's a business stopper for the
>> partner. I have the feeling that those that asks this did not understand
>> the real value of OpenERP (upselling).
>>
>> Migration of custom modules is guaranteed (at an extra 800€/1000 lines
>> of code). So, it's not an blocking point to upgrades. The value received
>> with the new features are more than worth this extra cost. In the
>> future, I expect we will even be able to divide this by the number of
>> customers using these community modules. This would allow to upgrade an
>> accounting localisation for only 70€. But we are not fully mature yet on
>> this.
>>
>>
>> As a summary; OpenERP Enterprise is a great success for us but we can do
>> much better as we still have 30% of partners that are not ok with it.
>>
>> I am open to the discussion if we can find other ways to improve this.
>>
>>
>>
>>
>> On 02/22/2014 06:08 AM, Eric Caudal wrote:
>>> Hi OpenERP Partners,
>>> There has been some questioning about the OpenERP Enterprise Contract
>>> after some of Fabien's email and there is a real debate/questioning
>>> about the value that this contract brings to the final customer.
>>>
>>> Current value is difficult to sell and lies basically (at least in my
>>> current sales experience) on the migration and somehow on the bug
>>> fixing. Other advantages are more difficult to handle:
>>> - Private license has been a reason for me but I think this is very
>>> specific to some customers.
>>> - There are those 2 hours support but this is few and not proportional
>>> to the number of users ...
>>> - The other reasons (automatic update and security alerts) seems to me
>>> accessories and not decision-makers
>>>
>>> So now the question would be what would bring additional value to the
>>> contract that would really interest the end customer?
>>>
>>> I am thinking about the following advantages that could be added to the
>>> current package (for same price):
>>> - one certification voucher
>>> - one access to a dashboard to check one or several OpenERP instance
>>> health (with statistics and alert if down)
>>> - specific Android application, only available if a valid contract is up
>>> (could be business oriented or support oriented)
>>>
>>> What about you?
>>> --
>>> Eric CAUDAL
>>>
>>> Eric Caudal
>>> /CEO/
>>> --
>>> *Elico Corporation, Shanghai branch
>>> /OpenERP Premium Certified Training Partner/ *
>>> Cell: + 86 186 2136 1670
>>> Office: + 86 21 6211 8017/27/37
>>> Skype: elico.corp
>>> eric.caudal@xxxxxxxxxxxxxx <mailto:eric.caudal@xxxxxxxxxxxxxx>
>>> http://www.elico-corp.com
>>>
>>> Elico Corp
>>>
>>>
>>> _______________________________________________
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>>> Post to     : openerp-community@xxxxxxxxxxxxxxxxxxx
>>> Unsubscribe : https://launchpad.net/~openerp-community
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>>>
>>
>> --
>> Fabien Pinckaers
>> CEO OpenERP
>> Chaussée de Namur 40
>> B-1367 Grand-Rosière
>> Belgium
>> Phone: +32.81.81.37.00
>> Fax: +32.81.73.35.01
>> Web: http://openerp.com
>>
>> _______________________________________________
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>> Post to     : openerp-community@xxxxxxxxxxxxxxxxxxx
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>> More help   : https://help.launchpad.net/ListHelp
> 
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-- 
Fabien Pinckaers
CEO OpenERP
Chaussée de Namur 40
B-1367 Grand-Rosière
Belgium
Phone: +32.81.81.37.00
Fax: +32.81.73.35.01
Web: http://openerp.com