CRN Interview: Shai Agassi, SAP

As a member of SAP's executive board, Shai Agassi is directly responsible for crafting SAP's strategy around next-generation integration technologies such as Web services. Aagassispoke with Editor in Chief Michael Vizard about how integration technologies such as Web services are helping to drive SAP's next-generation applications strategy, as well as the company's plans for attracting new channel partners specifically for the midmarket.

CRN: Like most vendors, the midmarket is becoming more important to SAP. What's your strategy in this space?

Agassi: We're trying to solve the problem of how [to] get all [of our] spokes integrated out of the box into the hub. The highest cost element of midmarket implementation is the integration into the ecosystem around it. If that comes out of the box, we solve a total-cost-of-ownership problem. For the midmarket, we have different software. If you look at Business One, it's a piece of software that comes on a CD and you can install it in a half-hour and get up and running. It's not our core software, but it's extremely powerful for a subset of the market. We have given that subset 80 [percent] to 90 percent of the functionality and 100 percent of the simplicity they need. They want something that is easy to install, manage and use. And then they want the back end to link into a mySAP implementation without having to hire IT services to put it in.

CRN: How is Business One different from mySAP?

Agassi: Business One doesn't do manufacturing. If you want to do manufacturing, you'll have to put in a mySAP system. If you try and give everything in a simple solution, it's no longer simple. There are some things that are good for the hub and some things that are good for the spokes. But if you connect them, you solve the whole gamut.

CRN: What is SAP's channel strategy?

Agassi: We're trying to create a good channel opportunity and not overcrowd the channel, which is what you are seeing with a lot of other vendors. We're trying to build a sustainable partner model that creates a great opportunity and builds for the partners a sustainable growth pattern over five to 10 years, ranging from Business One to mySAP.

CRN: In the midmarket application space, will you be competing with Microsoft more directly?

Agassi: [Microsoft] jumped into what I call the capital "S" of the SMB space. We have been in that space. We have 18,800 customers, so they are not all Fortune 100 companies. And we will continue to be in that space.

CRN: How will SAP reach out to third-party ISVs given its market dominance?

Agassi: We will show them all the aggregated processes that can be used to create new things. We don't have the intent to do all of them. We will only do 20 [percent] to 30 percent of them ourselves. We're going to ISVs and telling them this is a great opportunity. We'll give [ISVs] the tools, environment and the sales force to take it to market. We will qualify it, certify it and stand behind it, which is something none of the other players have done. By building this ecosystem, they will get access to a market opportunity that nobody in the applications business has created before. We're serious about it.