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Channel partners help SaaS provider enter overseas markets

Startups increasingly tap channel partners for help with product sales and marketing. It’s a logical combination: The early-stage company gets access to the partner’s established customer base and the partner gets access to emerging technology and a potential point of differentiation.

This approach also lends itself to young software as a service (SaaS) companies as they branch out into international markets. OneLogin Inc., a San Francisco company that offers a cloud-based single sign-on and cloud identity and access management platform, provides a case in point. The company, founded in 2010, is partnering to establish its presence outside of the U.S. OneLogin, for example, works with T-Systems in Germany and NEC Solution Innovators in Japan.

T-Systems is an information and communication technology (ICT) service provider and subsidiary of Deutsche Telekom, while NEC Solution Innovators, also an ICT company, is part of NEC Group.

“The reasons we decided to go to the market this way are really around scale,” said Marcus Mueller, managing director, EMEA, at OneLogin.

Citing the example of T-Systems, Mueller said OneLogin can tap into the company’s numerous sales people in Germany and thousands of consultants and technicians. He said T-Systems has around 3,000 sales people and 45,000 employees, overall, many of whom are technical staff.

OneLogin believes partnering provides an edge over the direct model of establishing and staffing oversees offices.

“How much easier it is to enable these local partners who have relationships with existing customers and very large field [sales] teams,” Mueller said.

The alliance-building method, however, takes a bit of effort to get off the ground. Mueller said the task involves locating channel partners in each geographic area that understand the company’s market space and are either investing in or already have a cybersecurity practice. Once partners are identified, OneLogin then builds a “partnering stack” for each geographic area, consisting of tiers of large national or international partners (such as T-Systems and NEC), mid-sized regional partners that might cover parts of a country, and smaller boutique value-added resellers and consultancies with significant local influence.

“It takes a little bit longer in the short run to get these [partnering efforts] going, but, in the longer run, the accelerated scale from this model more than pays off for us,” Mueller explained.

Partnering does more than offer an established customer base and feet on the international street for product-selling purposes. Overseas channel partners provide the added benefit of local implementation resources and technical personnel for post-sales support.

International alliances with brand-name companies also provide customers with the assurance of stability. If something unexpected happened to OneLogin, T-Systems, for instance, would have the legal and fiduciary responsibility to replace OneLogin with a substitute technology that would deliver on the same service-level agreement, Mueller noted.

In addition, alliances help SaaS startups comply with international regulations. OneLogin said its offering in Germany is hosted on Deutsche Telekom’s Open Telekom Cloud public cloud infrastructure, an arrangement that lets it “fully address German data privacy and compliance requirements.”

When a German enterprise signs up to use OneLogin, the technology will be delivered locally in a German data center operated by T-Systems personnel. Such localization is becoming more important in light of European data privacy law.

OneLogin has been working with T-Systems for about four months and is now set to do business in Germany. OneLogin signed a contract with T-Systems in September 2016, began running on the company’s cloud in October and passed its security audit in December, Mueller said.

“Everything is place, and we are ready to sell to customers,” he said

A SaaS startup’s international partnering strategy reinforces the benefits, in general, for early-stage companies that are quick to the channel: The ability to scale using a partner’s sales and marketing muscle, the credibility of an established name and the availability of localized post-sales support personnel.

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