SAP To Give Partners Bigger Cut Of Support Sales

VARs now will get 15 percent of a maintenance/support sale, up from 10 percent previously, channel sources told CRN. Maintenance and support typically are 17 percent of SAP's software license sales.

SAP announced the move to a positive response at its annual sales meeting this week in Denver.

Dan Kraus, vice president of SAP Business One, acknowledged that the partner cut of maintenance/support sales was being increased, but he declined to specify the number. Partners filled in the blanks, however.

"This is a huge deal because that's where the recurring revenue stream is," said Quincy Faison, president of Netsirk Technologies, a Business One partner based in Sunrise, Fla.

Rob Delf, a partner at Tryarc, a Los Angeles-based SAP solution provider, concurred. "Recurring revenue is always nice. As long as the customer is happy, it keeps coming," he said.

In comparison, partners of SAP rival Microsoft Business Solutions typically get 20 percent of the maintenance fees on Microsoft ERP sales, channel sources said.

SAP also announced the addition of 11 new U.S. Business One partners and the expansion of three current partners into new geographies. Business One is SAP's ERP solution for small and midsize companies.

New partners are Connect Vision of Orlando, Fla.; Daan Consulting of Chicago; Dalcom Consulting of Greensboro, N.C.; Data Business Systems of Virginia Beach, Va.; The Elevation Group of Allentown, Pa.; 5th Gear Solutions of Lake Forest, Calif.; Munics Information Systems of Clifton, N.J.; Niefert Certified Solutions of San Diego; Real Solutions of Chicago; Software Outfitters of Boise, Idaho; and TBC International of Salado, Texas.

In addition, RSM McGladrey of Bloomington, Minn., has expanded its Business One practice to more of its offices, as have Tryarc and IMG Americas.

Kraus said it's clear that Business One, which claimed its 10,000th customer last month, is becoming a factor in midmarket ERP, where SAP battles with Microsoft Business Solutions and Sage Software products.

"In three and a half years, SAP has taken a product that was unheard of in the U.S. and taken on a market it was not known for with partners and it had not worked with before and grown that into a very substantial business, " Kraus told CRN. "Now partners are coming to us," he added.

SAP now has about 160 Business One partner locations in North America. Kraus uses the location measure, rather than total number of partners, because SAP hopes to avoid oversaturation of partners in any one area.

"Our whole philosophy is we want fewer partners with multiple locations. It keeps margins intact and, from an SAP standpoint, we have fewer partners and principals to work with," Kraus said.

The unsaid addendum to such an approach is that there will be less partner-vs.-partner competition and margin erosion. Some business software competitors of SAP have a more volume-oriented approach, which ends up hurting their partners, according to solution providers.

Business One's momentum remains strong and, contrary to conventional wisdom, less than 10 percent of its business is in shops where the product is expanding an existing SAP footprint, Kraus said. "The bulk of our business is coming from independent entities that make their own buying decisions," he noted.

Last week, SAP's Waldorf, Germany-based parent company said second-quarter software sales were weaker than expected. The company is due to report its quarterly earnings on Thursday.