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CRN: What's the success rate now that you've adopted this new recruitment approach?
Gilroy: Now our success rate with new recruits over the last 18 months or so is in the 70 [percent] and even 80 percent. They're real serious people and they know how to build a sales pipeline. And that's the other problem when you have recruiting targets; you say your target is 100 new partners, and they just start signing up anybody just to hit that goal and get their bonus. And then those are the partners that come to you asking for leads. And that's the kiss of death. What we want are partners that, for example, say, 'Let's talk about the health-care market in Boston. SAP has Mass General covered, great, but let's talk about the hospital on Cape Cod and other places where you're not covered.' So we're really excited about this recruitment strategy. Carrie Maslen [vice president of global channel development at SAP], who came over from HP with me, has been re-engineering this all over the world. It's still an ongoing process, but she's been a powerhouse and she really gets the channel.
CRN: Are you recruiting big partners of competitors like Oracle and Microsoft?
Gilroy: Sure, we talk to competitive partners, not just for Microsoft and Oracle but also Cognos and other competitors where it makes sense. But that's where you really have to understand the balance sheet because picking up a second product line is expensive. So you have to look at the risk profile. If a partner says they're an ABC partner and now they're going to pick up SAP, then ABC might turn around and say, 'You're picking up SAP? Well don't expect any more leads from me.' So what's the risk profile for that partner? Are they going to go ahead or are they going to back out?
CRN: Now that the recruitment is more detailed, does the process take longer?
Gilroy: No, not at all. The surgical recruitment is much better for the partner. The best answer for a potential partner in this process is 'yes.' But the second best answer is a fast 'no.' The worst thing for a potential partner is a slow 'no.' You go through the business contracts and the planning process and nine months later, nothing is really happening and you eventually end the relationship. It's better for us to quickly say, 'Listen, I just don't see it. I don't think this a good marriage, and I know you're not happy, but I think it's best for everyone.' So we try to make those decisions quickly.
CRN: So you have a success rate in partner recruitment in the 70 percent range right now. Can you push it even higher?
Gilroy: Well, we get into the 80 [percent range] sometimes, but if you go higher than that, then I think you're doing it wrong.
Gilroy: If you're up past the 80 [percent range], then I think your risk profile is too low and you're not taking enough risks. If I made it to 95 percent, then you're only going after guys that we think are basically 100 percent locks. But we need to take some chances and take some risks on new kinds of partners. We have to explore some alternative channels like accounting firms and even telcos.
CRN: So SAP is looking for software VARs that have the capital to make investments and move into the cloud. But are you finding enough VARs that also have the desire to move to the cloud, too?
Gilory: Well, that's an issue. The lifestyle VARs are really hard to change. That's where the subjective analysis really comes into play. Will they take the risk on moving to new areas like the cloud? We get a lot of guys that say they're interested but when it comes down to it, they start asking questions about how much we're going to pay them to make the move. So we do have some parallel recruiting where we'll say if a partner makes the investment in, say, cloud, we have the Glengarry leads and we'll prime the pump a little so it lowers their risk profile. But the traditional VARs that are 50-something years old and have been in the software reselling business for a while, they're pretty hard to convince. Some would rather just save their money and shut the business down than take that risk.