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SAP Expands Cloud Partner Program With New Referral Option

Executives also plan to increase spending on product development, marketing and partner recruitment to increase sales to small and midsize customers.

SAP is adding a customer referral option to the ways that solution providers can profit from generating sales leads for the software company's cloud products.

The new SAP PartnerEdge Cloud Choice–Referral Option comes as SAP executives plan to increase spending on the vendor's small and midsize enterprise (SME) go-to-market efforts, including recruiting additional channel partners.

Adding urgency to SAP's moves is Oracle's recent $9.3 billion acquisition of cloud application competitor NetSuite, possibly creating a window of opportunity for SAP. Also impacting the market is Microsoft's recent launch of its Dynamics 365 cloud applications.

[Related: SAP Targets Digital Transformation Projects With Its Next Generation Of The HANA Platform]

"It's going to take Oracle time to figure out the new portfolio, the new segmentation, the new positioning and the messaging to the market," said Rodolpho Cardenuto, president of SAP global channels and general business, in an interview. "It's going to be a very complex situation. I think we're going to have a window of six months [when] the market is going to be more willing to hear from us."

SAP launched the PartnerEdge Cloud Choice--Profit Option in August, the first component of what eventually will be a multifaceted cloud partner program accommodating different partner models for working with SAP's cloud software.

Under the Profit Option, now operating in 24 countries and being rolled out in more geographies this quarter, partners drive the sales cycle, including identifying customer prospects and providing post-sale implementation and support services, while SAP signs the subscription contract and handles the billing. Partners receive a percentage of the contract's value -- both for the initial year and for renewal years.

Under the new Referral Option, unveiled Thursday at an SAP SME Summit event in New York, solution providers earn a finder's fee for cloud software sales leads they bring to SAP. The fees are 10 percent of a deal's value in the U.S., 5 percent in some other countries.

Any solution provider, even those not members of SAP's PartnerEdge program, can take advantage of the offer. Solution providers have to officially register the lead with SAP to get the fee.

Cardenuto said the Referral Option, available immediately, is particularly aimed at two types of partners: inactive solution providers in SAP's partner program and solution providers who come across opportunities outside their areas of expertise.

SAP currently has some 15,000 partners in the PartnerEdge program, but only about 7,000 of them are active, Cardenuto said. The opportunity referral option, the channel chief said, offers a simple way for inactive partners to re-engage with SAP.

Other partners might come across an opportunity they wouldn't pursue themselves, such as a solution provider that's focused on CRM applications with a customer that's interested in adding cloud e-commerce applications. The new Referral Option allows that partner to refer the opportunity to SAP, which can bring another solution provider with e-commerce expertise into the deal, and earn a finder's fee in the process. Cardenuto said that could prevent the opportunity from being lost to a competitor.

"So now [they] make money," Cardenuto said. "Why wouldn't you engage with us if you can make money? So now we'll transform the dormant partners, the inactive partners. And we'll extend the active partners to engage with other partners to make sure that we cover 100 percent of the customer's needs."

The Referral Option also will help SAP recruit new cloud solution providers by creating an entry point, said Karl Fahrbach, SAP global head of channels in the company's global channels and general business operations.

The SME Summit is an SAP event designed to highlight the software vendor's success in selling to small and midsize companies, which SAP defines as those with fewer than 250 employees and with between 250 and 1,500 employees, respectively. At Thursday's event Cardenuto said about 85 percent of SAP's 300,000 customers are SMEs, and about 90 percent of those SME customers have come through channel partners.

But at the event SAP executives said the Walldorf, Germany-based company has underinvested in its SME marketing efforts and made it clear that's about to change.

"SAP is putting some sizable stakes in the ground" to indicate its seriousness in the SME arena, said Barry Padgett, president of the company's SME business that oversees the Business One, Anywhere and Business ByDesign application products that are sold to SME customers. Padgett was named to the president's post in May after holding various positions during a 19-year career at Concur Technologies, the cloud travel and expense application SAP company acquired in 2014.

Padgett, for example, said that over the next 12 months the company would increase by a factor of five the marketing resources devoted to Business One, including channel partner recruitment and enablement, and spending for marketing programs. The company plans to increase the number of strategic solution providers, companies that develop vertical-industry extensions for SAP applications, by 30 percent beyond the current 700.

And over the next nine months the company will increase by 50 percent the amount of product development and engineering resources devoted to Business ByDesign, the company's cloud application set for SME customers, Padgett said.

Several years ago SAP considered discontinuing Business ByDesign and executives this week acknowledged that the vendor has given mixed messages on the product's positioning. Now the company is doubling down on Business ByDesign as its cloud application set for SMEs, and Cardenuto said the company is forecasting 35 percent sales growth for the product this year.

SAP's growing focus on SME customers meets with the approval of its channel partners. "There has not been a better time to be an SAP partner than right now," said Donald Dickinson, president of Dickinson and Associates, a Chicago-based solution provider that works with SAP's applications, and mobile and business analytics software. He praised the resources, training opportunities and marketing content SAP makes available through the PartnerEdge program.

Dickinson, in an interview with CRN at the Thursday SME event, said that he sensed a surge in SAP's development and marketing efforts for its cloud software, especially the cloud version of the S/4HANA application suite, back in July when Oracle announced the deal to acquire NetSuite. NetSuite's cloud applications, along with ERP applications from Microsoft, are generally seen as the closest competition for SAP in the SME arena.

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