SAP’s Channel Inflection Point


Time is right to partner with ERP giant


Anyone who deals in the complex mix of channel art and science knows there are no overnight success stories. Any shift from a direct-sales-dominated culture to a charged-up channel model takes time and CEO leadership.

Under way right now is the remarkable transformation of SAP. And it’s a channel story that is accelerating with SAP’s $5.8 billion planned acquisition of Sybase. A $15.3 billion software giant that five years ago couldn’t even spell the word “channel” has moved from one-third of its sales coming via partners to more than 50 percent. And that channel growth, in my view, is likely to skyrocket over the next several years given the channel investments, the software solutions and the flat-out, time-is-right SAP channel zeitgeist.

For partners willing to make an investment in the SAP model, the payoff is going to be astronomical. If you’re looking for proof, look no further than Optimal Solutions Integration, the largest pure-play SAP integrator in the country.

Elliott Garofalo, Optimal’s senior vice president of Small Medium Enterprise (SME) markets, credits the change in channel commitment at SAP as key to Optimal’s robust 40 percent sales growth in the midmarket in 2009. Optimal even hired more than 200 people last year.

Optimal, of course, brought its own sharply focused SME strategy to the table. The company did not make the mistake of trying to shoehorn an enterprise business model into the demanding SME market. And SAP, for its part, realized that to continue to grow it needed to aggressively go after the SME market and it needed to find a group of “go to” solution providers.

SAP’s board of directors has even given the channel organization a mandate to move 100 percent of SME sales for the company’s SAP Business All In One solutions through partners. The Sybase acquisition is icing on the cake. That brings the complex SAP ERP solution into the smartphone world, and that’s going to mean big profits for partners that get with the mobile program. The race is on among all the enterprise software giants to smartphone-enable their solutions.

“This is a fantastic opportunity,” said Garofalo. “The future is mobile computing with sales guys with an iPhone able to run and execute ERP business transactions in realtime.”

The SAP channel team, under the direction of SAP Senior Vice President Patricia Hume, deserves a lot of credit for changing the SAP culture. Now the company is ready to take its next big channel step and has hired Kevin Gilroy as Americas Vice President to take the U.S. volume sales effort to another level. Gilroy’s appointment is just one more sign that the stars are aligning for SAP.

The time is right for an SAP partner renaissance. Those partners willing to step up and make a significant investment are going to see a big, big payback in the years ahead.

BACKTALK: Do you see the SAP stars aligning? Contact Steven Burke at steve.burke@ec.ubm.com.