Software Rebadging: The Good, The Badge and the Ugly

Resellers that rebadge software can quickly earn a fistful of dollars, but if they aren?t careful, they can end up buried at Boot Hill. Annie Gurton reports

Taking software from a specialist company and rebadging it has two distinct attractions for resellers. First, if they sell it as their own, they can make more money than from reselling branded software and second, their customers will think they have an impressive software development team. Along with the fact that it also allows users to get the best combination of sophisticated functionality and specialist local support, it is no wonder that rebadging is an increasingly popular reseller activity.

Despite clear disadvantages to this arrangement for both the reseller and the original developer, rebadging is replacing the practice of simply reselling shrinkwrapped software products because the benefits are so extremely persuasive.

For the developer, the benefits are most compelling when it is fresh, green, and trying to establish itself. As the firm and its products then become more mature, an emphasis is placed on direct sales, although rebadging retains some appeal. Keith Auchterlonie, divisional manager of Aran, which provides a rapid application development (RAD) tool to resellers, says that a short time to market, reduced cost of development and reduced business risk make a strong argument for encouraging resellers to rebadge.

?Aran?s business proposition to its resellers has been built around the benefits of software rebadging,? he says. ?But we also rebadge other vendors? software and realise the approach has potential pitfalls.?

The most obvious drawback, says Auchterlonie, is that the rebadged component may not have the same look and feel as the rest of the solution the reseller is providing. The approach by vendors to this problem falls into two camps. One camp, which includes Microsoft, tries to ensure a consistency in developers? products, while the remaining vendors are apparently unconcerned that their software is completely concealed behind the reseller?s own front end.

Martin Earley, business development director at document management software firm Global Recall, says the objective is to provide components which will seamlessly integrate, not to establish a brand name. ?We will certainly see more rebadging going on as software becomes more commoditised,? he says.

Unfortunately for resellers, Earley also sees more in-house software development going on, with in-house programmers replacing expensive integrators. ?Users are more literate and less reliant on integration skills and services. Many of them are quite capable of taking an accounting component and embedding it in software which they have developed in house for their specific business? application.?

Several pundits agree that it is customers? requirements that are largely driving the trend towards greater transparent embedding of software components. Roger Gilheany, business development director at Cognos, says many vendors and integrators recognise there is no point reinventing the wheel. If a customer wants a certain reporting ability for example, it is quicker and easier to implement and integrate some existing code rather than sit down a write it from scratch.

Gilheany says: ?Customers are demanding better access to the information which is tied up in their data, and although many products come with basic reporting and analysis functionality it is rarely sufficient for their needs. Introducing a third-party product which can be seamlessly integrated means that they do not have to invest in programming and the customer gets the functionality they are looking for.?

The biggest problem, however, for everyone from original developer and vendor to reseller and user, is maintaining quality. As David Errington of Sagesoft points out, with several hundred resellers integrating software into their own solutions, it is impossible to check every line of code, or even load the applications and take a look at them.

He says, ?There is no doubt that quality control is a major concern, and every vendor that allows developers and integrators to include their software in applications is faced with the same challenge: how to ensure application integrity and prevent brand damage through incompetent use of your code.?

Sagesoft produces a set of guidelines for its developers on coding, the user interface, testing, installation and documentation. Developers and integrators that meet the guidelines can brand their product with the Sage logo. This means it is in their interests to meet the quality guidelines set by Sage.

But, as Errington says: ?In one way we want to make it as easy as possible for developers to take our code and embed it in their applications. We don?t want anyone developing their own double entry accounting system ? we want them to use ours!?

Approved resellers can take Sage?s software and add it to their application, although the degree of adoption varies according to the individual. Errington says: ?Some resellers want it to be obvious that it is the Sage software that is embedded, because it gives it credibility, while others want the integration to be entirely transparent and seamless.

Errington and Gilheany say resellers that completely hide the original brand name will be expected to provide all the support that the user might want, while those that retain some of the original branding can usually fall back on the vendor for support to the user.

?Obviously, resellers that provide all the support will earn more,? says Gilheany.

Vendors are reluctant to get involved in the prices that resellers set for customers. Gilheany says: ?It is up to resellers what they charge.? It is also up to the resellers to be honest with vendors about how many versions they sell, although some vendors have mechanisms for monitoring the sales.

Rudge Bowen, European MD of Pick Systems, says that all applications based on the Pick database have to be activated, although it would still in theory be possible for dishonest resellers to activate and support applications themselves.

Earley says control of developers and applications is the biggest single headache, and there is no silver bullet solution. He says: ?We depend a lot on being extremely selective about our resellers and ensuring that they meet stringent requirements for support and quality control, but frankly after that we have very little control. We have a licensing agreement which we could cancel, and that?s about it.?

But Earley also believes that many resellers are aware of the long term relationship and would not risk alienating themselves from the vendor which develops the code. ?Their customers are continually looking for improvements and upgrades and it is our development labs and programmers that are doing that work. They want to continue to offer upgrades and so it is important to them that we don?t fall out.?

The vendor is responsible for maintaining brand awareness, says Earley, and for that reason it is important that any application developed using Global Recall?s tools conforms to a look and feel standard. ?That?s what Microsoft does,? he says, ?and it works. Users feel comfortable because it is familiar.?

Auchterlonie says that rebadging may also mean that the reseller has to depend on a software developer for upgrades and customer support, which may fall short of what the reseller and customer expect.

?The reseller will be passing off the rebadged components as its own,? he says, ?and customers will expect the same level of software robustness and support for those components as for the rest of the application, and they will expect this support from the reseller.

?The reseller needs to be absolutely certain that the third-party supplier is able to guarantee this level of support. The user, faced with a serious system failure and no likelihood of a quick fix, is not likely to take kindly to the explanation that ?we can?t solve this ourselves ? we are waiting for xyz?s development staff on the other side of the world to come up with a solution and we don?t know when this will be available?. The reseller?s reputation will be on the line.

?Before entering into any rebadging agreement the reseller must check the developer can provide the expected level of support and R&D.?