Partners See Progress In SAP's Evolution Into A Channel-Friendly Company


Can a software vendor that's best known for selling big applications directly to big corporations evolve into a channel friendly company?

SAP, Europe's largest software company and a major player in the global IT market, is expanding beyond its ERP application roots into new areas such as business analytics, mobile computing, data management and cloud computing. And it's counting on the channel to help it get there.

Next week SAP will hold its annual Sapphire conference in Orlando where customers will be looking for clues about the company's plans and strategies for the upcoming year. Joining them will be hundreds of solution providers -- both long-time SAP partners and more recent recruits -- who will likewise be looking for the latest information about the company's strategic direction.

"It's a good way to understand what they're working on, what's coming down the path, what's unfolding," Marty Carney, CEO of WCI Consulting, told CRN. WCI, a Dallas-based company that focuses on business analytics, was recently named SAP's fastest growing global reseller in the SAP PartnerEdge program. As such, networking with customers, prospects and SAP executives are also on Carney's agenda.

SAP reported revenue of 14.2 billion Euros ($18.5 billion) last year and about 25 to 30 percent of those sales were made through indirect channels. Co-CEO Bill McDermott's goal is to grow that figure to 40 percent by 2015.

"The channel ecosystem is an essential element of our growth strategy," McDermott said in an interview at SAP's U.S. headquarters in Newtown Square, Pa., in December.

McDermott said he was satisfied with SAP's channel efforts so far, noting that channel sales have tripled from what they were when he became co-CEO in February 2010. But partner recruitment is ongoing because the company needs solution providers' domain expertise in its designated growth areas and ability to reach small and midsize enterprises (SMEs).

SAP also needs partners to get more sales feet on the street to support its growth plans to reach annual revenue of 20 billion Euros ($25.9 billion) by 2015. "We simply can't cover everything with a direct sales force," McDermott said.

The company today, however, is a comparatively small player in the channel with about 10,000 partners worldwide, including about 3,000 VARs, with the remainder being comprised of systems integrators, service providers and ISVs. That's in sharp contrast to competitors like Oracle, which has about 20,000 channel partners worldwide, and Microsoft's stable of more than 500,000 partners worldwide.

While many know SAP best for its enterprise-class ERP applications, the fact is that 78 percent of the company's customers are SMEs -- which in North America SAP defines as businesses with annual sales of $500 million or less. "We're trying to make the point that SAP [products are] for great companies, not just great big companies," McDermott said.

And close to 80 percent of those SME customers are currently served by channel partners, a number SAP has decided will over time become 100 percent. That's an opportunity for solution providers, given that sales to SMEs are growing at 1.5 to 2 times the rate of the company's overall software sales.

NEXT: SAP's Channel Enlightenment