Business analytics software developer SAS has an ambitious plan to shift a significant portion of its midmarket sales away from direct sales with the goal of having 50 percent of midmarket revenue coming through the channel by the end of 2020.
The plan will require significant realignment of the company's field sales coverage model and coordination with its direct sales force, said Russ Cobb, senior vice president of growth and business operations.
It also will require making changes to some current SAS products to make them more midmarket-friendly, Cobb said, as well as keeping midmarket customers in mind when designing new products.
Cobb, in an interview with CRN at the SAS Global Forum 2018 conference in Denver this week, also said the company sees the Internet of Things as a potentially significant market for the company and its channel partners.
Today SAS has close to 1,200 partners including resellers, systems integrators, consultants, OEMs and managed analytic service providers (MASPs) – the latter being partners who provide SAS analytics as a service through private or public clouds combined with their own software and services.
Only about 5 percent of privately held SAS's $3.24 billion revenue in 2017 was generated through channel resellers and MASPs, according to Cobb.
"Our expectation is that's going to grow much more significantly," Cobb said. "We've set an objective … that by the end of 2020 we want to get to 50 percent of our sales into the midmarket customer segment running through channel partners."
More than 35 percent of the company's new sales revenue in 2017 involved, or was influenced in some way, by partners, up from just 6 percent in 2013. Last year the channel played some kind of role in nearly 50 percent of the company's largest deals.
SAS defines midmarket companies as those with annual revenue between $250 million and $1 billion, although they can be as small as $100 million. In Europe the definition is companies with revenue between 100 million and 500 million euros.
The decision to shift midmarket sales to the channel follows the conclusion that SAS must service the midmarket much more efficiently than it has through direct sales.
"We've acknowledged that we've got to have a reseller channel model for the midmarket that is far different, far more expanded than we have today," said Randy Guard, SAS chief marketing officer, also in an interview at SAS Global Forum.
"We see this as a customer segment that we can service in a different way. We can grow our revenue, but we can do it in a more effective way than we have done in the past," Cobb said.
Cobb, who is SAS's channel chief, has especially high expectations for sales through MASPs, a program SAS really just began ramping up last year and now has about 60 partners. MASPs include major systems integrators such as Accenture, Capgemini and Deloitte, as well as service providers that focus on niche vertical markets.
"I'm expecting MASP growth to be pretty significant over the next three years," Cobb said. "It allows us to get access to markets that we wouldn't otherwise have access to."
The challenge for the company is aligning the company's field sales coverage model with the plan and segmenting customer accounts to create separate "swim lanes" for direct and channel sales. While inside sales and telesales operations may have a role in designated channel accounts, "We're going to lead with the channel in those accounts," Cobb said.
On the product side, Cobb said SAS is known for its sophisticated products that handle complex analytical tasks – maybe more than what midmarket customers need.
"But increasingly we're designing different kinds of products and different kinds of offerings that we think are more suited for midmarket customers," Cobb said. That includes scaling back existing products to provide editions with the functionality and smaller configurations that midsize customers want. It also means designing new products specifically for the midmarket.
CMO Guard said the effort might also mean making changes to SAS' licensing models: Smaller customers might want to buy a product licensed for a small number of users, for example, instead of the enterprise license SAS sells its larger customers.
Guard said the midmarket channel initiative also would require a significant partner enablement effort, ensuring they have the necessary sales, delivery and support skills that match the SAS products they are selling.
On the Internet of Things front, SAS executives see a potentially huge market for the company and its channel partners given that IoT systems are expected to generate huge volumes of data that need to be analyzed – SAS's forte.
SAS's IoT-related sales grew 60 percent in 2017. Many sales are focused on SAS's Event Stream Processing software.
Given that IoT deployments often incorporate products from multiple vendors that require a high level of integration and, often domain expertise, Cobb sees IoT as inherently a channel play for resellers, MASPs and OEMs.
"Ninety [percent] to 95 percent of all the business we do in the IoT space will be with, and through, channel partners," Cobb said. "That's just the nature of how the market is evolving, it's the nature of how customers are expecting to solve their IoT issues."
"Our expectation is we will get our reach in the IoT market with and through the channel," Cobb said.
One such partner is Octo Telematics, a Rome, Italy-based solution provider that develops analytical services for the insurance and automotive industries. The company works with SAS analytical products to process and analyze streams of driver data collected from automobile sensors.
"Delivering intelligence through SAS' best-of-breed analytics is at the heart of what we do," said Gianfranco Giannella, chief operating officer at Octo Telematics, in a statement. "In shifting from static to dynamic or streaming data, insurers can achieve what we call the 'Internet of insurable things.'"
In January SAS created a global division that brings IoT-related developers, product management, product marketing and commercial operations under one roof. The division is led by Jason Mann, a 14-year SAS veteran.
The IoT division targets applications in manufacturing, government, retail, insurance, health care, and energy and utilities.