SAP's Agassi On Partners, Oracle, Competitive Landscape

SAP is often portrayed as the king of the direct-sales model, but company execs say it is an exemplary partner to VARs, integrators and ISVs.

Executive board member Shai Agassi goes further: "We're the most partner friendly company in the world. We've created tremendous opportunity for everybody who works around us. We have a great symbiotic relationship [with partners] it's not that we don't need them or they don't need us. We both need each other and provide each other with tremendous value," Agassi told CRN Wednesday afternoon.

Agassi, who heads product development and technology and product marketing for the ERP giant, spoke at the company's Sapphire 2006 conference in Orlando. There, the company announced its acquisition of Frictionless Commerce and its supplier relationship management expertise; the general availability of MySAP 2005; and a new business intelligence accelerator.

As SAP tries to better penetrate small and mid-market companies with its BusinessOne and All-In-One lines, this partner mantra had better prove true, observers say. SAP started moving into small- and mid-sized companies with BusinessOne and All-in-One early in the decade.

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Leo Apotheker, the SAP executive board member in charge of sales, acknowledges that channel conflict is always a concern, but says the company has made great strides with its new compensation-neutral sales model rolled out in the U.S. early this year.

"We felt there was a real opportunity to provide mid- sized customers with two applications that are fit for industries and for sophisticated businesses [that are smaller] and not treat them like step children," Apotheker noted.

"We know from our data, from our experience, from everything we do, that partners are an essential ingredient to make that happen," he said.

SAP's own sales force is now structured so that it is "completely immaterial for execs and for people who work in territory sales, if [a product] sells indirect or direct," he noted.

The fact that SAP recruits a select group of partners as opposed to huge numbers could make profitability easier to attain for those who make the cut. Some in the Microsoft world say that company's "carpet bomb" approach to partnering has led to over-distribution and margin erosion as partners compete for business.

Quincy Faison, president of Netsirk Technologies of Sunrise, Fla., says SAP's model is working out well for him. Netsirk added BusinessOne to its IBM hardware practice a few years back and has since grown from five to 15 employees. There is plenty of business and little partner-vs.-partner conflict because there are just four or five BusinessOne partners in the state, he said.

Dan Kraus, vice president of SAP BusinessOne said the idea is to add feet on the street by enabling partners to add to their own payroll.

Still, there are areas of confusion in SAP's partner plan. Some point to Duet as an example of the company "not getting" the partner proposition. Due next month, Duet integratew Microsoft Office front ends with SAP back ends. SAP's version will initially be available only direct from SAP although a spokeswoman said it will eventually sell through SAP partners as well. Meanwhile, Microsoft will make its version widely available through its partner channel right off the bat.

As SAP forges its path to the mid-market, applications rival Oracle is doing the same. The battle is getting hot and Agassi expressed frustration at the tone some of the competition has taken.

Clearly irked with some Oracle marketing and PR moves, Agassi blasted the Redwood Shores, Calif. company—now armed with PeopleSoft and Siebel applications—basically for resorting to cheap tricks.

"That's one of the differences you see between the relationship we have with Microsoft and the relationship we have with Oracle," he noted. SAP and Microsoft compete in mid-market business applications but "you don't see Microsoft or SAP taking ads in the Wall Street Journal, changing data, inventing all kinds of numbers just to shoot at each other even though we're in a battle in the midmarket. It's a gentleman's battle. We tell the truth and we try as hard as possible to win but we do it in a gentleman's way," he noted.

But other competitors are making what he called "desperation moves."

"When you go and hire 12 taxis, put signs on them and run them to drive around this show, you're in desperation mode," he said alluding to Oracle.

"You can't expect a serious enterprise company that comes to Sapphire to look at 12 circulating taxis and think: 'This is a company I'd like to partner with for the rest of my life.' You make a clown out of yourself. When you skew your numbers that you just reported in an SEC report and you take a line from my presentation, cut the beginning and the end and put portions in the Wall Street Journal, you make a clown out of yourself and it just plays into our hands. But it plays against the industry. One clown in the industry makes us all look less serious," he noted.

Going into this week's show the two vendors upped the competitive ante, Oracle claiming 500 customer wins from SAP and SAP announcing discounted support option for Siebel applications. SAP's TomorrowNow group already offered such support for PeopleSoft applications.