CRN Interview: Henning Kagermann, CEO, SAP

SAP CEO Henning Kagermann spoke with West Coast Bureau Chief Rochelle Garner about his company's midmarket and channel strategies. Here is an excerpt from that conversation.

CRN: Earlier this year, you told your sales organization that the midmarket is strategically important to SAP. Can you explain why you said that?

KAGERMANN: One reason is upselling opportunities in existing accounts. Many large companies have acquired small companies, or have subsidiaries around the globe, and have pushed us to come up with a lighter version that's cheaper and easier to implement. Also, the midmarket is important as we look for growth opportunities. So the first reason is driven by existing customers. And the second is SAP strategically wants to expand beyond our enterprise applications.

We have hundreds of partners. We have resellers. We have partners that are both resellers and offer a micro-vertical solution for mySAP All-in-One, which I call a combination between ISV and reseller. And we have ISVs that complement our solutions and rely on our channel partners.

CRN: Can you give some idea on what SAP has spent on building a channel?

KAGERMANN: I won't give you an amount in millions.

I will give you a feeling for what we've done. We've invested many, many millions going into the channel. And if you follow SAP, you know we will use our enterprise service architecture as our key building block to shorten the time we need to bring newer midmarket products to the market and bring cost of ownership down. All-in-One will be one of the first products on that SOA [service-oriented architecture] platform. That gives a feel for how important the midmarket is to us.

CRN: Oracle is your chief competitor in the enterprise space. Is it also a competitive threat in the midmarket?

KAGERMANN: I don't see Oracle as a competitive threat in the midmarket.

If you look at them from the outside you might feel they are slightly stronger in that market than in the high end. That's true. But if you look from a competitive point of view, I believe the tougher competitor is Microsoft.

We have an advantage—our long history of experience in industries. I think you need deep industry knowledge in the midmarket as well [as the enterprise]. We have our business process platform, with a modern architecture, that will come early to the market. So far Microsoft is focused on improving the products they've acquired and have had to delay Project Green. So that gives us a period in which we can really compete against them.