… and the deals terms we used to structure the partnership
Charlie Fritsch · Hotel Investor Apps
Published September 1, 2022In 20 minutes, you’ll learn:
- How to structure your ERP partnership
- 3 impacts on profitability (Contribution value vs cost)
- How to drive more sales & profits adding apps Off ERP
Explore the lesson. Sign in to access the slide download.
Charlie Fritsch explains why Hotel Investor Apps built on an ERP rather than creating an accounting platform from scratch. He compares OEM and VAR partnership models, outlines royalty and ownership terms to negotiate, and describes how ERP capabilities, integrations, and adjacent business-intelligence products can improve time to market and profitability.
Read the source passagesFind the ideas you need and go straight to the source.
“who's a successful serial software entrepreneur he sold us his first company to Cisco in 99 for 175 million and so he was our software and Tech business advisor from the beginning and he said well don't you know an accounting platform is is daunting to build from scratch so look at building on top of an”
“it actually a value-added reseller may only get 40 percent of the revenue whereas a original equipment manufacturer can get oh uh 70 to 80 percent uh depending on volumes so this is the structure of the Erp partnership and important considerations development time excluded from royalty”
“can negotiate uh we were not able to to get it immediately but we have a trigger to be able to do that and some control over if somebody else was going to enter using accumatica into the hotel space so we became the solution on the accumatica platform for the hospitality industry”
“and that's what we're experiencing far more functionality and integrated isv community so we had lower startup costs quicker to revenue royalty for Erp replaces the internal development and support costs so it's not like we're just paying a royalty were were getting something back for the royalty payments in uh support and continued research and development from”
“developers in-house so we'd use them on a part-time basis uh and flexible basis more initially but now we're accelerating the development uh and again we can operate a little bit leaner because we are built on top of an Erp and then we host on AWS”
“Building on an ERP? Look for broad Excellent general Functionality ISV Community Commitment to R&D-staying current Open API Automations Integrations Why, what, cost CHOOSING AN ERP OEM VS VAR REVENUE SPLIT OEM: Original Product Creation (from vertical knowledge & expertise) OEM own your code VAR provides configuration, training and support of ERP VAR-no code to own OEM: Minimum Royalty, plus percentage royalty on considered revenue. OEM=keep more of revenue Only pay royalty on ERP SAAS revenues Can also build apps on other platforms w/no revenue share”
“OEM Original Equipment Manufacturer ERP royalty for OEM VA is 20% - 30% of Considered Revenue (allows for OEM support to customers) ERP royalty replaces original product creation and support”
“Structure Your ERP Partnership Development time excluded from royalty Monthly or quarterly payments Revenue share split of recurring platform rev. % Declining as revenue scales up Important Considerations ROYALTY FEE SPLITS OWNERSHIP Support service fees Non-ERP products excluded Set-up, implementation, customization, training fees, etc. excluded Own your code Vertical Exclusivity? ERP add-ons Territory? Own 100% of all apps not built on the ERP”
“ERP Partnership Impact on Profitability Minimum Royalty as OEM Revenue split on ERP revenue Contribution value vs cost COSTS CONTRIBUTION RESULTS Faster Development Quicker to market Low Churn Far more functionality Integrated ISV community adds revenue opportunities Lower startup costs Quicker to Revenue Royalty for ERP replaces internal development and support costs Use ERP to capture & retain customer base Drive internal growth with more apps built OFF of the ERP”
“Over the last 20 minutes, I showed you: OEM commits to ERP w/min. Royalty, keeps higher % How to drive growth and maximize profitability when partnering with an ERP. Partnering with an ERP Structure the Deal Impact on Profitability Leverage ERP capabilities Get as much dev. time as you can Only pay % on ERP based recurring rev Negotiate rights Revenue split replaces in house dev & support Build on ERP strengths Drive more sales & profits adding apps Off ERP Own what you create”
Video
How we are using ERP partners to create a billion dollar company - Slide Deck
Charlie Fritsch is President and Founder of MBA Hotel Brokers since it’s incorporation in 1997, as well as President and Founder of MBA Capital Funding, Inc., incorporated in 2004. Charlie Fritsch earned the designation of Certified Hotel Broker (C.H.B.) in 2001 and brings 22 years of experience in commercial real estate development, management, financing, and brokerage to the company. He began his real estate career in 1984 with the purchase and rehab of two historic hotel properties.
Adam Baker · Dealpad
Armando Biondi · Breadcrumbs
Damian Thompson · Revteam
Mauricio Kigiela · Docsales
Andre Cvijovic · Referrizer
Ari Salafia · Taxtaker
Find a passage in the slides and open the original deck.
20 passages
Charlie Fritsch Founder, Hotel Investor Apps How we are using ERP partners to create a billion dollar company Founder500, Sept 2022 … and the deals terms we used to structure the partnership
Over the next 20 minutes: Choosing an ERP I’m going to show you OEM VS VAR ERP DEAL TERMS MANAGING PROFITABILITY Advantages of OEM and VAR Typical Royalty/ Revenue Split for OEM vs VAR Minimum Royalty Fee Splits Ownership & Rights Costs ERP Contributions Results
Building on an ERP? Look for broad Excellent general Functionality ISV Community Commitment to R&D-staying current Open API Automations Integrations Why, what, cost CHOOSING AN ERP OEM VS VAR REVENUE SPLIT OEM: Original Product Creation (from vertical knowledge & expertise) OEM own your code VAR provides configuration, training and support of ERP VAR-no code to own OEM: Minimum Royalty, plus percentage royalty on considered revenue. OEM=keep more of revenue Only pay royalty on ERP SAAS revenues Can also build apps on other platforms w/no revenue share
Highest Rated ERP in Usability G2 Summer Mid-Market Usability Index
Fastest Growing Global ERP 6 Years and Counting, 2022 There’s a reason Acumatica is the fastest growing Cloud ERP company for 6 years and counting: we put our customers first
ISV Ecosystem 250+ Independent Software Vendors
OEM & VAR One or Both
VAR Value Added Reseller
OEM Original Equipment Manufacturer ERP royalty for OEM VA is 20% - 30% of Considered Revenue (allows for OEM support to customers) ERP royalty replaces original product creation and support
Structure Your ERP Partnership Development time excluded from royalty Monthly or quarterly payments Revenue share split of recurring platform rev. % Declining as revenue scales up Important Considerations ROYALTY FEE SPLITS OWNERSHIP Support service fees Non-ERP products excluded Set-up, implementation, customization, training fees, etc. excluded Own your code Vertical Exclusivity? ERP add-ons Territory? Own 100% of all apps not built on the ERP
Minimum Royalty As an OEM
ERP Partnership Impact on Profitability Minimum Royalty as OEM Revenue split on ERP revenue Contribution value vs cost COSTS CONTRIBUTION RESULTS Faster Development Quicker to market Low Churn Far more functionality Integrated ISV community adds revenue opportunities Lower startup costs Quicker to Revenue Royalty for ERP replaces internal development and support costs Use ERP to capture & retain customer base Drive internal growth with more apps built OFF of the ERP
Non-ERP Software Structure Sample Corporate Enterprise Customer w/14 different providers
ERP Software Structure Sample HIA Customer: Power of ERP functionality and integrations
Hotel Investor Apps Revenue Growth
Hotel Investor Apps Revenue Growth
BI App Built off the ERP on a BI Analytics Platform Adding customer driven products for more growth of revenues not subject to ERP split, sold to same customer base.
Over the last 20 minutes, I showed you: OEM commits to ERP w/min. Royalty, keeps higher % How to drive growth and maximize profitability when partnering with an ERP. Partnering with an ERP Structure the Deal Impact on Profitability Leverage ERP capabilities Get as much dev. time as you can Only pay % on ERP based recurring rev Negotiate rights Revenue split replaces in house dev & support Build on ERP strengths Drive more sales & profits adding apps Off ERP Own what you create
Over the last 20 minutes: Choosing an ERP I showed you how to drive growth and maximize profitability when partnering with an ERP OEM VS VAR ERP DEAL TERMS MANAGING PROFITABILITY Advantages of OEM and VAR Typical Royalty/ Revenue Split for OEM vs VAR Minimum Royalty Fee Splits Ownership & Rights Costs ERP Contributions Results
September 2022 Charlie Fritsch Founder, Hotel Investor Apps