Discover the methodology behind the Tercera 30, one investment firm’s view into the most promising enterprise software ecosystems for service partners.
Not all software partner ecosystems are created equal. As former operators and growth investors in IT services, this is a fact with which we’re intimately familiar. We also know that for technology services firms, it’s not always easy to choose the winners. But it can be disastrous to bet on the losers.
That’s why we created the Tercera 30—to help entrepreneurs and services leaders identify high potential software partner(s) for their business and their customers from among the ever increasing number of vendors that are vying for coveted spots in the enterprise IT stack. We believe the companies on the Tercera 30 can realistically support a growing technology services firm or practice area of at least $10 million – if played right.
That latter point is very important. Picking an ecosystem with growth potential is only a piece of the equation. When you get in, and how you play it, matters greatly. You could build a $100M+ services firm around some of these players, while others might be better as part of a broader solution offering. Some might be a more natural fit to the segments you already serve, while others might be in a completely tangential.
Picking an ecosystem with growth potential is only a piece of the equation. When you get in, and how you play it, matters greatly.
Partners also have to factor in timing, as there is a natural maturity curve for these ecosystems. The earlier you get in, the more pull you might see from customers looking at the new “hot” technology, or partners that might need you more than you need them. The later you join an ecosystem, the more crowded it might be, which can make it hard to be single threaded or an undifferentiated generalist.
So consider the Tercera 30 as one data point for an overall partner strategy.
The Tercera 30 keeps getting better
We started the Tercera 30 in 2022, building on research that helped guide many of our own initial investments in ecosystem leaders. Since then, we’ve refined our weightings and added more qualitative research.
Over the last three years, it’s been fascinating to see the evolution of the software vendors on the Tercera 30. Which ones continue to excel and drive partner growth, which ones have matured their programs over the years, and which ones have stagnated.
The Tercera 30 class of 2024 was selected based on four key dimensions that contribute to a high-caliber, growth-oriented partner ecosystem:
1. Market size and potential: What is the current and future size of the market? Is the segment big enough to support a significant services business or practice? What does growth look like in the market segment?
2. Brand and growth potential: Is the software company perceived as a leader in their chosen segment? Is it considered dated technology, or is it taking share? Is the company investing in the product and future growth? Are they poised to leverage or be disrupted with AI?
3. Potential for external services: Is the product targeted toward small and medium businesses and easy to implement? Or is it enterprise-grade technology that can be highly customized, paving the way to medium to large projects with high service intensity? Is there a level of talent scarcity around the platform necessitating the need for outside support?
4. Partner support and collaboration: How open and supportive is the partner program? How easy or difficult is it to enter as a new partner? Are Global Systems Integrators taking interest? Is there an internal professional services team with which partners will compete for work?
These four factors balance company and product growth potential with partner ecosystem quality and how a software company views and supports its partners. We believe the latter matters just as much – if not more—in determining technology services firm success.
These dimensions haven’t changed since our first Tercera 30, and they are equally informed by public data, proprietary data we collect from our many interactions in the space, industry opinion, and actual partner experience.
A few updates for our upcoming 2024 list
For the 2024 list, we’ve made a few updates to refine the selection and scoring even more. These include:
- Factoring in R&D as a percentage of operating expenses to give software companies credit for their commitment to innovation
- Rating AI investment level to assess how well companies are staying at the forefront of technological innovation
- Measuring internal professional services as a percentage of revenue to gauge how much partners will need to compete for deals
- Adding peer reviews (G2 and Gartner) for deeper insight into perceived performance and value
- Giving more weight to qualitative input from our survey of services firms and interviews with bankers and research analysts
In 2023, Tercera introduced a qualitative survey of executives from services firms that play within the Tercera 30 ecosystems to better understand their experience. In 2024, we increased the number of survey respondents from 55 to 250 with the help of an external research partner and assistance from G2 and 3Seven. We gained a much richer and deeper response from service firm CEOs and managing partners, and the respondents represented virtually every software partner ecosystem in the Tercera 30.
The survey was fielded between July 29 and August 15, 2024, and gauged perceptions of existing software relationships, future partnerships being considered, and how services firms are leveraging and thinking about AI. We looked at what technology services firms value in a partner program and what they believe it takes to be a successful partner. And we explored the factors contributing to rapid growth for partners. Overall, we gave greater consideration to survey input in this year’s selection process.
The Tercera 30 winners perform across a variety of factors
All the research, data, and findings from these various sources filter into a scoring formula, that is complemented by various discussions with Advisors, IT services leaders, software partner leaders and industry analysts. The results point us to our final Tercera 30 list.
We invite you to meet the 2024 Tercera 30 on September 25, and to use this data to inform a short list of your own.
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