A GSI could improve an ISV's customer lifetime value, but a boutique SI could provide more one-to-one attention and influence renewals. In this article, we explain the types of SIs and the benefits and downsides of partnering with each.
April 1, 2022
Note: this is the latest in our Partnerships 101 series. You can read the others here.
System integrators. The name itself can sound a bit Matrix-y without the right context.
But system integrators (SIs) significantly impact the conversion and retention rates for their independent software vendor (ISV) partners. In fact, HubSpot predicts bringing in more than $12.5 billion from its solution (think: SIs) and app partners by 2024.
The business impact SIs effect for their partners is game-changing, but understanding how to partner with them (or what they are) isn’t exactly the easiest thing to Google. So, we did the research for you. Let’s start with a brief explainer of what SIs are and why they’re important.
What to expect:
What Are System Integrators, and How Do They Benefit Clients?
An SI (often referred to as a “solution” or “consulting” partner) is a type of channel partner that audits, leads, and manages improvements to a client’s tech stack and business processes. Basically, they tell companies what they can be doing better and take care of all of the changes once the company gives the go ahead. This includes scenarios like:
- When the client is looking to optimize its workflows and systems across departments as it scales
- When a client is interested in optimizing a specific department, function, or tool (like hiring an SI to evaluate and improve marketing ROI)
All SIs are channel partners, but not all channel partners are SIs.
For the client, hiring an SI can be more cost effective than hiring and onboarding full-time employees. After all, the SI completes similar projects for clients across the globe — They’re the experts! Some SIs put their own employees within a client’s org to manage a project from within. For example: a handful of the SI’s employees may work at their client’s office managing and overseeing the processes and strategy they’re implementing across the client’s teams.
There are three types of SIs: Global System Integrators (GSIs), Regional System Integrators (RSIs), and Boutique System Integrators. We’ll cover all three types after explaining the basics of how independent software vendors (ISVs) partner with SIs.
How SIs Work With ISV Partners
SIs often partner with ISVs (think: tech partners) as the software they use to make improvements for their clients. For example: an SI might partner with Outreach.io if they’re trying to help the client increase its return on investment (ROI) from the sales department. Using Outreach.io to engage more prospects could be one piece of the SI’s overall strategy.
SIs often sell their ISV partners’ software in the early stages of the sales cycle and then hand the prospect off to their ISV partner to sign the contract and provide direct payment for the ISV’s software. Once the deal is signed, the SI partner helps the client adopt the software and drive value for the remainder of the customer lifecycle. Depending on the relationship between the SI and the ISV, the ISV’s professional services team may provide additional support to the client in tandem with the SI to help the client with specific use cases or custom projects.
If the client’s relationship with the SI ends, the client can continue to use the ISV’s product since the contract for the product remains with the ISV. Alternatively, if the client chooses to no longer use the ISV’s product, the SI would need to recommend a different product to suit the client’s particular needs.
Since SIs often develop custom-tailored hardware or applications for their customers, SIs are often confused with value-added resellers (VARs). VARs customize their ISV partner’s products to create additional value, typically for a single product or use case (think: Roketto, a marketing services agency, that sells HubSpot to its clients with their ongoing support and services), and then end the engagement. SIs have an ongoing relationship and often provide consultative services and any number of improvementsto the client’s technology and workflows.
SIs can be highly specialized. If you scroll through an SI’s LinkedIn database of employees, you’ll see roles like “Climate Change and Sustainability Expert,” “Cloud Architect,” “Managing Director, P&L” (Product and Loss), and “Data Engineering and Visualization.”
SIs hire employees who have experience with their partners’ software and train employees to become strategists who can develop new ways to use their partners’ software for a variety of clients. SIs build these consultative services into their client fees, while clients typically pay the ISV directly for the usage of their software.
SIs often show their success through case studies featuring their ISV partners’ software, original research predicting business trends and needs for particular categories, industry-specific surveys, and other business insights. These insights show potential clients how they could and should be adjusting their business to stay ahead of changes in work and technology, all with the goal of outdoing their competition.
A few examples of SI success stories:
PWC’s success story featuring its “cloud and digital strategy” improvements for AXS Map
Atos’s success story for client Acea Energia with ISV partner SAP
Accenture’s success story improving automation, data, and analytics for its investment banking client
Examples of System Integrators
- Atos is a GSI that specializes in advanced computing, customer experience, decarbonization, Internet of Things (IoT), and more. They’ve partnered with ISVs like SAP, Oracle, and Cloudera.
- PWC is a GSI that specializes in audit and assurance, cloud and digital, cybersecurity, financial statement audits, and more. They’ve partnered with ISVs like Microsoft, Oracle, Veeva Systems, and Qlik.
- Upper Sigma is a boutique Salesforce SI that helps businesses in the legal, financial, and professional services space audit and optimize their workflows and results from Salesforce. Upper Sigma is an example of an SI that has also developed its own ISV product. Upper Sigma can partner with ISVs to implement their ISV partners’ products for clients, and they can develop joint solutions or integrations with their ISV partners. They’ve partnered with ISVs like revenue acceleration platform Introhive to bring relationship data into their product Sigma Lifecycle Manager, a lifecycle and relationship management tool built on Salesforce.
- Accenture is a GSI that offers its expertise and services in AI, ecosystem services, security, business process outsourcing, and more. They’ve partnered with ISVs like SAP, Adobe, Oracle, Workday, and Red Hat.
- EMMsphere is a boutique SI specializes in digital asset management (DAM), marketing resource management, and work management solutions. They’ve partnered with ISVs like Aprimo, Workfront, Censhare, and Allocadia.
- Ugam is an RSI that specializes in analytics, digital commerce, technology, and market research using Adobe, Qualtrics, UserTesting, and Confirmit for retail, high tech, and more. Dentsu Aegis Network acquired a majority stake in Ugam, which is based in India.
Let’s break down the different types of system integrators and the pros and cons of each.
Global System Integrators (GSIs)
Global System Integrators (GSIs) have global offices and hundreds of thousands of employees. Their clients include companies on the Fortune Global 500 list. A GSI can generate millions of dollars in revenue annually with a single client if the project is right. (So, partnering with a GSI can be extremely advantageous for an ISV.)
Due to the size of a GSI’s team and the scope of their projects, it can be difficult for an ISV to get a GSI’s attention. A small ISV will need to invest in developing their value proposition, expanding their ecosystem, and expanding in relevant markets in order to catch the eye of a potential GSI partner. The ISV’s software needs to work well with other software the GSI implements for their clients for projects across the globe.
Some GSIs acquire boutique SIs and agencies to expand its offerings to include more niche services that fill an existing gap in their services or resonate with an existing market. The boutique SI or agency may take their clients with them, but the attention they’re able to give those clients may get diluted following the acquisition.
GSIs are the smallest category of SIs, and they’re the SIs that seem to have the biggest reach for their ISV partners. They’re experts in many specializations across many markets, so they can have a huge impact on their ISV partners’ customer lifetime value and retention.
Examples of GSIs:
The GSI category on Informatica’s partner page
Depending on the maturity of an ISV and its partner program, one type of SI may be more appealing and accessible than another type of SI as a potential partner. If the ISV has proven their product’s market value and has a large enough customer base, they might partner with a GSI to increase their international presence and to include their software in special projects they wouldn’t be able to conduct on their own. If they’re a small ISV with a niche offering, they might partner with a boutique SI to deliver more value from their product for existing or potential customers as part of a specialized strategy (More on boutique SIs in a bit!).
Additionally, while GSIs may have offices and experts in many countries, a regional system integrator (RSI) may have a stronger presence in a particular market or vertical due to their more concentrated focus.
Regional System Integrators (RSIs)
While GSIs can fulfill a wide range of capabilities for their clients, RSIs specialize in particular business functions, verticals, and geographic regions.
Depending on the client’s needs, an RSI might be a stronger contender than a GSI if they specialize in the client’s business objectives, vertical, and nuances of the particular region they’re targeting. However, GSIs and RSIs are very similar in nature. The services each type of SI provides may overlap, but GSIs have offices in many more countries and provide a wider variety of services. A general rule of thumb: the smaller the SI gets, the narrower its focus.
Examples of RSIs:
- Ugam (Specializing in digital commerce, analytics, and more, with four ISV partners)
- Unico Solution (Specializing in data management and governance practices for verticals like financial services and healthcare)
- Slalom (Specializing in process optimization, agile transformation, and more, with offices in six countries)
- Infoverity (Specializing in digital experience / customer experience, customer & product information master data management, and more for financial services, healthcare, and more)
- Jade Global (Specializing in cloud infrastructure services, IT sourcing, and more for life sciences and healthcare and hi-tech)
Boutique System Integrators
Think of boutique SIs as your “neighborly” SI. A boutique SI has highly specialized offerings (e.g. supporting clients in using one particular software or to improve marketing performance through the implementation of new tools and processes).
Boutique SIs are typically smaller in size and have more niche specializations than GSIs and RSIs. For example: Boutique SIs could be two employees or 100 employees, whereas Accenture has more than 500K employees. Rather than covering a wide range of projects like GSIs do, boutique SIs aim to become the best in their category. Due to their high level of specialization, they, too, can have a global reach.
ISVs partnering with boutique SIs can expect more one-to-one attention. If the ISV’s software fits into the boutique SI’s niche strategy, they’re going to be invested in maintaining their expertise in the ISV’s software and supporting the ISV throughout the sales cycle. For example: If the ISV has customers who are likely to churn due to inactivity, they could introduce the customers to their boutique SI partner to help them maximize value from their product (if they haven’t done so already!). In contrast, a GSI manages such large projects that an ISV’s software is just one small piece.
Examples of boutique SIs:
- LeapPoint (Specializing in strategy & roadmapping, implementation, and more for financial services, healthcare, and more for marketing, IT, and PMO)
- EMMsphere (Specializing in advisory, enhancements, and more for marketing organizations)
- Bitvoodoo (Specializing in advistory, cloud migration, and more for collaborative workplace solutions with Atlassian)
- Upper Sigma (Specializing in Salesforce solutions)
You might be thinking boutique SIs sound similar to “agency partners” (And they do!). The two types of partners can overlap in some ways. But while an agency might develop an ISV’s marketing campaigns, an SI can help the ISV’s team (and its agency) improve ROI with new tools and integrations. SIs make the systems and processes work more efficiently to drive better business results.
Note: This is one of the many great debates in partnerships. The lines continue to blur between SIs and agencies, especially as SIs continue to acquire agenciesandagencies acquire RSIs and boutique SIs! Beyond the change management, operations, and training, don’t be surprised to learn that some SIs also offer content strategy, SEO, and more as a result of their agency acquisitions.
Should You Partner With a System Integrator?
There are several common reasons SIs are worth partnering with:
SIs serve as a gateway to target businesses in a stage of growth — whether they’re leading the transformation of a specific department or the entire organization. For example: a client could hire an SI to improve security across all of its departments once it hits the 100-employee mark. Prior to this stage of growth, relying on employees to use 1Password and two-factor authentication might have been adequate enough. As the business’s employee-count grows and the number of tools they use increases, they’ll need to invest in greater security measures to lessen its security risk across the organization. Your software could play a critical role in their client’s growth, and your SI partner can ensure that your software works effectively with the rest of their client’s tech stacks — improving your retention and increasing annual recurring revenue (ARR).
SIs help ISVs spend more time on product growth — Since SIs manage most of the consulting and implementation work on behalf of their ISV partners, ISVs can focus their time on expanding their product and less time on providing one-to-one client services.
SIs help ISVs close more deals, faster — If you’re a small to mid-stage ISV, your SI partner is often the first to broach the idea of working with your product to the client. They’re already working with the client on a variety of initiatives and can include your software as their top recommendation for one part of the overall picture. The client puts their trust in the SI and thus has some level of trust in your software by association — long before your sales team gets involved.
Take Allocadia, for example. The marketing performance management software company’s ideal customer profile (ICP) prioritizes companies with $250 million or more in annual recurring revenue (ARR) — a turning point for growth for many SaaS companies. Its SI partners often include Allocadia in request for proposals (RFPs) as the recommended platform for maximizing the potential client’s marketing spend, alongside other complementary softwares. In many cases, the SI partner supports potential customers in the buying decision and has greater influence in accelerating deals for Allocadia than the company would have on its own.
SIs can offer discounts in exchange for scale — The amount of deals an ISV can close through its SI partner makes it easy for ISVs to offer their product at lower rates. The result? More ARR.
Potential Pain Points for Partnering With a System Integrator
The bigger the SI, the more difficult it can be to enable them. GSIs can have hundreds of thousands of employees, so it can be difficult to ensure each employee providing services for your software are maintaining their expertise and have completed your latest certification courses. The ability to consistently improve and expand an ISV’s software is an upside of SaaS, but it can also be a pain point for SIs using hundreds of ISV partners’ software and their integrations.
If SIs take risks with your software, there could be room for error. A good SI partner will consult their ISV’s professional services team if they’re recommending and implementing new strategies outside of their comfort zone. If an SI takes risks on behalf of the client, and the results are negative, it can sour the client’s view of the SI and the ISV, and it can negatively impact the partnership.
It can be difficult to get the attention of a GSI when you’re a small ISV. GSIs have their hands full with large “digital transformations” involving multiple pieces of software, new processes and change management, and consistent communication and training with their clients’ teams. Additionally, there are a limited number of GSIs in the world, so a small ISV that hasn’t proven its market value yet will have difficulty establishing a partnership with a GSI. Do your research to ensure your value proposition, existing product features and tech ecosystem, and success stories with existing customers resonate with your potential GSI partners.
Consider working with a boutique SI first to pioneer some of the experimentation and use cases that will be appealing later to RSIs and GSIs. Be transparent with your boutique SI about your plans, and ask them for feedback. Additionally, network with professionals in the SI space who can validate whether or not you’re on the right track and potentially include you in relevant projects.
If the client doesn’t continuously use your software, you’ll stop earning partner-influenced revenue. SIs make most of their revenue through services. If the client stops using your software after deployment, you’re minimizing the value you could be getting from the partnership. It’s extremely important to continuously communicate with and enable your SI partners so they can maximize value from your software, making your product an indispensable part of the client’s tech stack.
The bigger the SI, the more fragmented the org structure might be. If an SI uses your software for Digital Commerce projects, it doesn’t mean you’ll also be a candidate for Data & Analytics projects. When GSIs have more than 100K employees, it can mean there’s less communication across offices, teams, and specializations and less room for advocacy for ISV partners looking to expand to new projects.
You may need to create new sales content for your SI to use on your behalf. Your SI partners may be involved in highly specialized projects, from “Decarbonization” to “Digital Assurance & Transparency”. The messaging and collateral your direct sales team uses to sell your software may not resonate with your SI partners and their clients. You’ll likely need to invest time and resources in creating custom-tailored sales collateral for your SI partner to use on your behalf.
Tips for Partnering With a System Integrator
Working with SI partners presents a huge opportunity for ISVs if they treat the relationship with care and know when and how to engage SI partners to source and accelerate deals. SIs also play a critical role in their client’s success using the ISV’s product — influencing the ISV’s overall retention rates.
Below, you’ll find some tips for embarking on your first SI partnership (or maintaining your existing ones):
- Keep your SI partner up to date on partner enablement resources and certification courses relevant to their clients (without overwhelming them with certification that’s not relevant.)
- Establish Ecosystem Ops (a set of repeatable, scalable practices) for your sales team to communicate and co-sell with your SI partner’s team. Since your SI partner likely has a stronger relationship with the potential client, it’s likely your sales team will have a hands-off approach until it’s time to sign a contract. That being said, your SI partner should maintain communication with your sales reps throughout the sales cycle so that your team knows how the deal is going, what the timeline looks like, and if and when they’ll need to step in to provide support. Whatever the case may be, make sure your sales team knows what to expect and knows how each SI partner prefers to work together. Try out this fill-in-the-blanks exercise to evaluate which activities your SIs should manage and which activities your team should invest more of its time on.
- Be transparent about how much or little you’d like your professional services team to be kept in the loop on ongoing client use cases and pain points. You don’t want your SI partner to lead the client down the wrong path and lose trust in your software. Catching a mistake earlier is better for you, the SI, and the client.
- Invest in a partner ecosystem platform (PEP) like Crossbeam to identify overlapping opportunities with your SI partners earlier in the sales cycle. For Allocadia, getting its product included in its SI partners’ RFPs is critical for driving partner-sourced deals.
- Invest in attribution tracking early to show the impact your SI partners have on revenue, and invest more of your team’s time and resources in the partners and tactics that are driving the most success. For example: Airship uses “parent” and “child” accounts in Salesforce to track a partner’s influence throughout the sales cycle. Here at Crossbeam, we’ve created a “Partner Relationship Object” (PRO) linking partner accounts to sales opportunities for our AEs in Salesforce.
- Connect your CEO with your SI’s CEO early on. Establishing strong relationships throughout your team and your partner’s team can heavily influence the success of the partnership long-term.
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