SAP’s channel investment starting to bear fruit

Kevin Gilroy SAP

SAP North American channel chief Kevin Gilroy

ORLANDO – Over the last fourteen months, SAP has invested more in using the channel to grow its business in the SMB space and beyond, and that commitment is starting to drive results, according to its North American channel chief.

SAP’s growth in the SME space in North America for its first quarter ended March 31 was 22 per cent. That’s not bad growth, but Kevin Gilroy, vice president of channel sales for North America at the business software giant, said his team’s group drove that number, bringing in 70 per cent year-over-year growth.

So what’s behind the growth in SAP’s channel?

Gilroy said there are a number of factors involved – but the most notable one is commitment. “We’re very predictable, when in the past we weren’t,” he said. “We were back and forth between direct and indirect. But now channel partners know that they can invest.”

As part of a push to grow its business in the SMB space, the company handed the business over to channel partners. Today, about three quarters of the company’s business in the space is through the channel, and Gilroy’s goal is to get that number up to 90 per cent by the end of the year. He estimates that at this point, with its oft-stated public goal of reaching one million customers by 2015, SAP can’t possibly reverse direction towards direct.

“There’s no way we reach a million customers in the next three years without the channel,” he said.

Despite that, Gilroy said the number-one question he gets from channel partners is one around how long SAP will continue in its current channel-friendly direction. Gilroy said he knows partners have felt burned in the past, and SAP will have to continue to be predictable for some time to get full support from partners.

Support for the channel from the very top of the organization is another positive sign, Gilroy said. When SAP announced its first quarter results, it did so in a short four-paragraph release – and half of one of those quarters was co-CEO Bill McDermott talking about the increase of revenues from partners. Add to that the promotion of Eric Duffaut to the position of president of global ecosystems and channels, one of four SAP presidents that report directly into the co-CEOs.

“He’s an advocate for the channel 24/7 and fights for partners day in and day out,” Gilroy said.

While the growth has been impressive thus far, Gilroy said it’s sustainable. Well, maybe not sustainable at 70-plus per cent year-over-year. But Gilroy said he is anticipating sustained growth from its channel business. “I’m signing up for north of 20 per cent CAGR for my horizon with SAP,” he said.

Part of predictability is becoming easier to deal with – not an easy task for a giant like SAP, but Gilroy said the company is making progress. For instance, a channel financing contract six months ago was a 20-page document designed for a Fortune 500 organization, and requiring a great deal of detail and deciphering, resulting in long turnaround times. Today, SAP has turned that around into a 1.5 page document that can typically be turned around in 24 hours. Ultimately, Gilroy said the goal is to get that into an Internet-based form with one-minute turnaround.

Gilroy said that right now, the number one request of partners is more pre-sales support, and it’s a request he’s working on delivering on. A year ago, the number-one request was for more leads, but SAP has seen a dramatic shift when it comes to leads. A year ago, Gilroy said, less than 20 per cent of all leads came from channel partners themselves. Today, that figure is more than 60 per cent. “We’re really encouraged by what our partners are doing,” he said.