SAP is launching an initiative to help channel partners develop fixed-scope, fixed-price packaged solutions around its cloud software targeting small and mid-size businesses.
The move is SAP's latest effort to both expand its own presence in the SME (small and mid-size enterprise) market, a goal that relies heavily on the channel, and to encourage its channel partners to add the vendor's cloud software to their product portfolios.
"SME is a key growth area for SAP as we move to the cloud," said Karl Fahrbach, senior vice president and head of Global Channels at SAP, in an interview with CRN. "And the partners are key to that strategy. The partners give us reach and scale."
The launch comes on the heels of SAP's decision to shut down its SAP Anywhere cloud application set for small businesses, which garnered only 30 active customers in the two years since its launch. SAP Anywhere was largely a direct-to-subscriber service that was not sold through the channel.
Through the new SAP Qualified Partner-Packaged Solution program, solution providers will bundle one or more of SAP's cloud systems and applications with their own services and intellectual property, such as software add-ons and extensions, to create fixed-scope, fixed-price packaged solutions.
SAP will conduct a "rigorous qualification process" to vet the partner's value proposition and ability to deliver, according to the company.
SAP will then promote the partner's solution on SAP.com, through the company's "partner-packaged solution finder," and engage in joint go-to-market activities in SME markets. SAP's own sales teams will also be made aware of the available packaged solutions.
The vendor also will provide standard tools and processes to implement the cloud products, said Sten Frellesvig, SAP director of partner packaging and commercial sales engagement, in the CRN interview. It already provides a software developer kit that partners use to develop cloud software add-ons and extensions.
SAP cloud products included in the program are Business ByDesign, S/4HANA and S/4HANA Cloud, SuccessFactors, Analytics Cloud, Leonardo, and SAP cloud applications for customers engagement and commerce such as Hybris.
This new initiative comes as SAP's cloud application efforts gain momentum, particularly through the channel. In January the company forecast that cloud software revenue would surpass traditional software license sales this year.
And the channel is contributing to that. Channel sales of cloud services are outpacing direct sales, according to Fahrbach. As of the end of 2017 the SAP PartnerEdge Cloud Choice – Profit Option program, through which channel partners sell the vendor's cloud products, accounted for nearly 50 percent of SAP's General Business indirect sales, Fahrbach said.
Navigator, a Salt Lake City-based solution provider that partners with SAP, has moved from selling both on-premise and cloud SAP applications to a cloud-only model as of two years ago.
Navigator CEO Grant Fraser, in a recent interview with CRN, said his company stands out because it developed its own intellectual property for remotely implementing and supporting SAP's Business One and Business ByDesign cloud software, as well as intellectual property for specific vertical markets.
"I think that's where the future of cloud is," he said.
SAP's cloud channel strategy is twofold, according to Fahrbach: Leverage its existing base of partners who have traditionally sold on-premise software by helping them move to the cloud, and recruit new cloud-only solution providers.
SAP has recruited 600 such cloud-only partners in the last 18 months, Fahrbach said.
The new solution packaging framework is critical to maintaining SAP's cloud momentum, said Robert Vetter, SAP senior vice president in charge of solutions portfolio management within the global partner organization.
SAP can provide only so many resources to grow cloud sales, necessitating a more efficient, more predictable way to sell and implement cloud services, Vetter said in the interview with CRN.
"This is really about replicability and scale," Frellesvig concurred.
Vetter expects the number of partners participating in the new initiative to be in the "multiple hundreds" by the end of this year and possibly exceed 500.