According to Brendan Walsh, Chief Revenue Officer for Origina, third-party enterprise software support services deliver a superior option to those offered by vendors such as IBM, and Gartner research shows this industry could grow to a value of more than $1 billion in 2023.
(Sponsored Content) In this sponsored Q&A, IT Europa spoke with Walsh to learn more about Origina and how its third-party support services can enable channel partners to help customers reduce the cost of maintaining their enterprise software.
Can you give us a short background on Origina?
Origina was established by Tomás O'Leary and Rowan O'Donoghue. Tomás was a former IBMer who was highly experienced in that space and had worked for IBM for a number of years.
The company was Initially an IBM business partner, providing support and expertise to organisations utilising IBM technology. After recognising the importance of providing customers with more responsive, customer-centric solutions, the company decided to transition away from being an IBM partner to delivering independent solutions and support, particularly for hardware and storage needs. That was the start, and the company was very successful in doing that for a number of years.
Tomás and Rowan both identified a market opportunity to refocus the attention from hardware to software. Our third-party independent support is very much a remote service and something that many megavendors provide to customers. They deliver their support from wherever the people are in the world.
Between 2015 to 2016, the company won its first business in this space, and in 2017 sold off the hardware business to Park Place to focus 100% on independent third-party software support and maintenance for IBM software.
When was the company founded?
The company was founded around over 20 years ago, but it was a very different business then, and it had a different name. It was called Unitech back then, and now it is called Origina. The original brand evolved because the Unitech name came from a relationship with another company in the U.K. that was called Unitech. We kept on using the brand Unitech here in Ireland but then changed it sometime later.
I joined the company in 2017 to help grow the company internationally. Our first customers were international. They were part of one small Irish company, which was part of the AXA Group. Most of our customers and our business was coming from overseas from the U.K. and as far as away as Australia.
What is the size and scope of the third-party support opportunity?
It's hard to put an exact finger on it but the IBM support and maintenance market for mainframe (z/OS) and distributed platforms is estimated to be around $10 billion. IBM charges their customers a maintenance fee, which is called subscription and support, right? It’s interesting that it is called subscription and support because it's not actually a subscription. You're not subscribing to anything. They make it sound like you're subscribing to something like a SaaS offering but they call it subscription and support.
They charge a percentage of the original licence fee every year, and it goes up annually, increasing on average by 7%. Customers start paying 20% maintenance on a product, and there's compound interest on that. Over time they’re probably paying 40% or 50% of the original price that they paid for maintenance.
Many countries and many customers faced a 24% increase after January 1, when IBM recently altered its pricing. Our market size is growing because IBM is continuing to increase its already high prices for support. We're only targeting the software support and maintenance market and offering customers a better alternative to that being provided by IBM.
What are the benefits your approach offers to end customers then?
Customers move to Origina mostly because they're dissatisfied with the quality of the support they're getting. We're a lower-cost proposition, but we know customers aren't naive. They don't move just because of price, right? They are looking for a quality support offering; terrible support at half the price wouldn't be very compelling, right?
They don't believe they're getting the support they're paying for from IBM. The evidence from talking to customers is that they're dissatisfied. They are dissatisfied with the relationship that they have with IBM. They are dissatisfied with the customer service they're getting. The response times to tickets are slow, and they're choosing to look for a better alternative. So mostly it's about quality of service and then access to skills and resources.
Our model gives customers faster access to the expertise so that their problems get resolved quickly, and if they're resolved faster then they have fewer operational challenges and less operational overhead. Our model is to get our customers engaged with our IBM experts as fast as possible and to remove the barriers that are typically put in place by IBM and other vendors when getting problems solved. We have the people and the skills to solve the problems that customers face, and we work with them to make sure that they can reduce the number of issues that they might have in the future.
Please can you outline your channel strategy? And typical margins that your partners can earn?
We're a very channel-friendly organisation. We realised our target customers are already the customers of existing service providers, whatever they're providing, and this is global. We target large enterprise organisations that have significant IT spending. The reason for that is that if they didn't have a significant IT spend, they probably wouldn't have enough IBM software, right? But they already are the customers of other suppliers. Of course, we could reach those customers ourselves. We have a direct sales force, but it makes sense to talk to companies who already have the relationships and have built trusted relationships with their customers and those suppliers. Those channel partners can then become partners of Origina.
There are a couple of reasons why channel partners want to work with us. We are disruptive and we’re innovative in what we do. Our channel partners want to sell Origina because they have their own products and service offerings; they realise that this is actually something of value to customers.
They can get the support they need at a lower cost, and our channel partners can then target those clients and help them reduce their costs. The challenge organisations have today is that 90% of the enterprise IT budget is tied up in keeping the lights on paying for all the software and services and subscriptions and maintenance they have today. Only 10% is available for innovation.
The CTO and CEO want the CIO to drive innovation far so they can be more competitive, reduce churn, and sell more products through the use of innovative technology, but they can't do that if they only have 10% of their budget available. There's a lot of money tied up in software, and organisations are paying unnecessary high maintenance charges. Our channel partners can bring an offering to their customers and say if you want to free up money for innovation but you can’t spend on supporting and keeping your legacy IBM product stable and redirect the savings to innovation, we can help.
That's one key reason. The other reason is some organisations twe work with know they can make their service contracts more profitable. For example, if they are currently selling IBM support as part of an overall package, they can reduce the cost of the IBM support and make their service contracts more profitable, delivering further value back to the customer. Margin is certainly one of the reasons why partners would want to work with us, but providing value and bringing service innovation to their customers is certainly a big draw.
In terms of your ongoing recruitment drive, what type of partners are you looking to work with?
The ideal profile of a partner is a company that has a relationship with the organisations that we're targeting and sees the value in what we do and the benefits and value we bring to their customers. We target large enterprise organisations that have a lot of IBM software. A channel partner of ours doesn't necessarily have to be involved in IBM today or be an IBM business partner. If they have a relationship with an organisation that uses IBM software and already have an existing relationship with key stakeholders interested in hearing our story, then we'd like to talk to them.
If you think about some of the FTSE 100 companies in the U.K. that have the highest IBM software spend, most of them are public sector bodies. Do they have suppliers selling in the enterprise space, enterprise services, and enterprise solutions? Working with those channel partners is beneficial to us, since they are able to let their customers know that Origina can provide them with better support at a reduced cost, enabling them to save money and invest more in digital innovation.
What are the next steps for an interested prospective partner?
We have a partner programme that is called Empower, and we have a section on our website dedicated to our partner programme. If partners reach out to us through our Empower partner page on our website, our channel partner team can provide them with the necessary information about how the programme works. We work with a number of organisations in the U.K. and Europe, and they can also reach out to us if they have opportunities within their specific customers through the same mechanism.
