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SAP To Focus More On Channel Sales Following Reorganization

Company commits to turning nearly all SME sales over to solution providers and the channel could account for 30-40 percent of all sales by 2015.

Software giant SAP has completed a corporate reorganization, including a restructuring of its channel operations that will result in the company relying on the channel for all sales to small and midsize customers and at least double the channel's share of SAP sales by 2015.

The reorganization, which creates four presidents reporting to SAP co-CEO Bill McDermott, brings all of the company's channel operations under Eric Duffaut with the title of president of global ecosystem and channels.

Before the reorganization, which was effective Jan. 1, SAP's channel operations were a complex matrix of the company's indirect sales and SME (small and midsize enterprise) operations. Duffaut, who reports to McDermott, said in an interview that all of the company's channel operations are now under a single manager for the first time.

The other presidents include Robert Enslin, who was president of SAP North America and is now in charge of all sales operations; Sanjay Poonen, previously an executive vice president and general manager, who now oversees SAP's go-to-market and solutions strategies; and Jose Duarte, previously president of SAP's EMEA operations, who is now president of all SAP field services.

The channel management changes will bring more continuity to SAP's channel efforts, said Duffaut, who oversees all partner categories including VARs, volume resellers and systems integrators.

"Partnering is critical to the strategy of SAP," he said, contrasting the company's reliance on partners with the approach taken by such vendors as IBM and Oracle to sell more complete hardware-software systems. "We want to drive co-innovation with our partners to better help us cover our markets, increase customer touch points and act as a force multiplier for SAP."

Next: The Channel's Share Of SAP's Sales

About 80 percent of SAP's customers are small and midsize businesses and sales to those customers are now about 50-50 direct versus indirect sales, Duffaut said. "We're going to transform this business towards a 100-percent indirect model," he said, adding that the company would make that transformation "very fast" with channels accounting for 90 percent of SME sales in North America by the fourth quarter, up from 50 percent.

SAP will even turn to channel partners to assist with some sales to large customers, what Duffaut called "targeted opportunities" in specific regions or vertical industries where a solution provider can bring specific expertise.

Today the channel accounts for about 15 percent of SAP's total sales and Duffaut said that would grow to between 30 and 40 percent by 2015.

Duffaut also shed a little more light on last week's departure of Patricia Hume as senior vice president of the global indirect sales organization. He said the reorganization had been in the works in late 2010 and Hume "was part of the plan" before she left for what he described as "very, very personal reasons." He also debunked speculation that Hume left to take a job with Hewlett-Packard where Leo Apotheker, formerly SAP's CEO, was named CEO last year.

"It's certainly a loss," said Elliott Garofalo, senior vice president of SME markets at Optimal Solutions Integration, an Irving, Tex.-based SAP channel partner, of Hume's departure. "She was instrumental in getting the mindset changed at SAP and implementing a real channel program."

But Garofalo said the channel program elements Hume brought to SAP, including veteran channel executives such as Kevin Gilroy, senior vice president of SME operations in North America, will ensure that SAP can continue to build on what she started. "I think SAP has put the right foundation in place and the partners need to step up and make the right investments" in personnel and infrastructure to take advantage of what SAP now offers.

Fritz Neumeyer, previously vice president of operations for SAP's ecosystem, was named to take over Hume's duties with the title of head of Volume Reseller and Service Partners. Neumeyer's previous job included managing channels for SAP's channel-only BusinessOne software, experience that Duffaut said would serve him well in his new post.

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