Since the launch of Microsoft Dynamics CRM 2011 an increasing number of partners have been asking me about business models for CRM Online. This is an exciting time, cloud based services presents a whole new realm of opportunity and we are already seeing partners developing very profitable businesses with CRM Online. However this is an uncharted journey and fraught with some risk. Many partners are in a period of transition, they have an existing traditional (or on-premise) based CRM practice and now with the release of CRM Online, are now exploring the model behind cloud based services.
So what is the secret you ask? The key to success lies in the 7 levers of profitability, notable elements are subscription price, average deal size, rate of customer acquisition and churn rate, to name a few.
The ultimate pay off in moving to cloud services is the annuitized revenue stream and increasing profitability (as measured by EBITDA). Our research and examples from other partners has shown successful, sizeable cloud-based business may have a valuation that is double a comparable traditional services-based business because their revenue is growing faster, they are more profitable, and their IP gives them better operating leverage with size.
And so I return to the original question, what is the best business model for building a CRM Online practice?
To answer that question in more detail, I have being recommending partners read the new Microsoft Dynamics Cloud Partner Profitability Guide. This guide is available to partners who use PartnerSource. With over 1000 hours of research, interviews and analysis and more than 200 partners testing the content. This guide is your compass for navigating the uncharted waters of cloud based service delivery. Start your journey today!