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Zendesk: Small Partner Program, Big MSP Potential?

Mikkei Svane

Mikkel Svane

Amid rapid growth at Zendesk, many pundits expect the IT service management, ticketing and help desk platform to gain momentum in the SMB channel — perhaps with VARs reselling Zendesk and MSPs adopting the platform. Some folks even expect it to compete against PSA (professional services automation) offerings that are widely adopted in the channel.

But so far that doesn’t appear to be the case. During an earnings call yesterday, Zendesk CEO Mikkel Svane said the bulk of the company’s business remains direct, though there are some signs of progress — especially on the ISV partner front.

“The partner program is still early relative,” Svane said. “Most of our business is still direct. So from that perspective, the partner business is a business that we’ve been growing over time. But from a percentage of revenue point of view it’s still a small percentage.”

Zendesk Partner Priorities

Most of the current partner emphasis involves software integrations with ISVs — particularly Microsoft and Google. “We’re spending time with partners like Google and Microsoft because they are a great source of customers that would need additional workflow for managing customer activities and so forth,” Svane said.

There are additional signs of partner program process. Check the Zendesk customer and partner listings, and you’ll find quite a few IT service management businesses on the list. Also, Zendesk seems to value SMB sales cycles, which tend to be shorter than traditional enterprise deals.

“We are seeing changes in terms of how long it takes to close deals between SMB and of the larger deals, where SMB deals close leads in quarter, whereas the other deals may take a little bit longer,” said Svane. “But the partner deals really don’t have an impact on our revenues today.”

Zendesk, ServiceNow and MSPs

Overall, the PSA and IT service desk community shouldn’t underestimate Zendesk’s momentum and long-term potential in the IT channel. Indeed, Zendesk’s Q2 2016 revenues were $74.2 million, up a whopping 54 percent from Q2 2015 and ahead of Wall Street’s expectations by about $3 million. However, the company had a $26.3 million GAAP operating loss for Q2 2016 amid continued investments for growth.

Somewhat similarly, ServiceNow is another fast-growth IT service management platform provider that’s starting to catch on with MSPs and VARs.

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3 Comments

Comments

    Stuart Crawford:

    We use Zendesk and it rocks…ties in nicely to our marketing automation platform Infusionsoft.

    Craig Deveson:

    Joe, this is a good update. Zendesk is used by a lot of ISV’s and ServiceNow is very popular in Enterprise. The one you have left out is Jira Service Desk from Atlasssian.Once again very popular with end customers as a part of a Dev Ops Tool Chain and support.

    regards Craig

    Joe Panettieri:

    Stuart, Craig: Thanks for adding some color commentary to the coverage. We’re keeping a close eye on Zendesk, ServiceNow and a range of emerging providers (i.e., FinancialForce) that may ultimately influence the way VARs and MSPs run their businesses. Keep the feedback coming.
    -jp

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