Google Apps Gauntlet; Using Resellers Will Be Tough

Google’s focus on ad revenue has been a potential weak point for the company and it rightly continues trying to diversify its business. The announcement that it will allow “technology solution providers” to resell Google Apps to businesses is just another example. But Google is about to find that working with a reseller channel is far more complicated, painful, and expensive than they have thought.

When the general business market is unstable, advertising will follow. Google has clearly seen this for a while, as its activities to diversify shows signs that planning must have been in place for years. Courting resellers for Google Apps is an amplification of that … and another way to officially challenge Microsoft. However, Google will find this step trickier than it might imagine. Making a group of resellers — whether you call them VARs, integrators, or solutions providers — work for you means mastering a whole range of issues that have tripped up many vendors.

• How do you make the product bulletproof?: We’ve all heard the stories of Google App outages. Customers may forgive that when dealing with a free product, but not when they are businesses paying for service. They will start screaming, and that will get the reseller partner echoing the cry, magnified by the number of clients simultaneously complaining. Office is far from perfect, but you don’t generally get mass outages that could result in a complaint tsunami, and that is a downcheck for Google.
• Who does support?: This level of seller is used to handling support calls, but they all need back-up levels of support in a hurry. Emailing or posting on a discussion forum in hope of an eventual answer isn’t acceptable. That means developing a robust support function that actually takes phone calls and walks people through solutions. Sure, it might be possible to outsource, but only when you’ve got the structure and working procedures already. Support is complex to design, tricky to implement, and expensive to fund. Yes, Google has done it on a lower level with its commercial products, but this is positioned to be broadly appealing, and success could bring its own problems. That doesn’t even count the pre-sales support, with marketing materials, lead generation, and other programs intended to help the resellers push the product.
• How much do resellers get?: They want enough money to make their long-term investment in the product line worthwhile. That’s going to mean a good 30 to 40 percent of the selling price.
• How do you reach resellers?: Although you might think that anything is easy on the Internet, finding the right resellers and getting their attention is a difficult task. Often companies work with distributors — who want additional pieces of the sales pie as well as even more money for marketing programs to reach the resellers in the first place. A former distribution executive I used to work with called this “money extraction devices,” but it’s a case that if you don’t pay, the distribution salespeople will go play with someone who helps them make more commissions.
• How do you give up control?: Waving money at resellers is not enough; you have to ensure that the work they’ve put in stays with them. That means if a large prospect looks particularly good, you don’t take it direct because that will burn your reputation with resellers, who can always go push Microsoft Office.

To make resellers work for Apps will need operations and even discipline that Google has not had to provide in the past. “Free software” is not going to work, and neither will the mechanisms compatible with giving product away. Google may succeed, but it will only be over a long time, and it will be a hard road with a far lower margin than in the past.