Cloud move puts focus on partner IP, SAP says

Karl Fahrbach, head of global channels at SAP

Karl Fahrbach, head of global channels at SAP

ORLANDO – As it moves its focus, and a substantial part of its business, to the cloud, the role of intellectual property developed by partners is changing, SAP says, evolving away from custom offerings that are developed as part of an omnibus implementation and deployment deal, and towards the generation of new products.

The generation of unique intellectual property is nearly ubiquitous in the SAP partners base, said Karl Fahrbach, head of global channels at SAP, who estimated that upwards of nine in ten partners are engaged in such activity. But how the company utilizes, recognizes, and advances that development effort is rapidly shifting.

“Before, it was just one part of the giant project they were taking on. Now, they sell it as a part of smaller package, and partners need to understand how to monetize it,” Fahrbach told, calling questions about monetizing their unique offerings the most frequent and prominent question he hears from partners.

Fahrbach described it as a “bundled approach,” and said that partners that take the approach of creating easily-consumable “bundles” of their unique IP combined with the deployment and integration services to make it all work with the core SAP pacakge quickly and easily. In the cloud, he said, companies are “willing to accept a standard product, but with a personalized experience,” and that’s where repeatable partner IP – by vertical focus or by specific role – comes into the equation.

Making it work requires partners to “be bold and put a price around their IP,” something many partners don’t have experience doing, because it’s been wrapped up as an accepted requirement of a larger overall price. But those who do so, he said, will be rewarded for their efforts with greater margins, a greater ratio of recurring to non-recurring revenues, and greater valuation for their organization.

“It’s not something new for our partners to do, but it’s something for them to monetize it,” he said.

At the the company’s Global Partner Summit here this week, that monetization of IP was a major theme. Fahrbach identified making sure partners understand the opportunity and helping them make the transition as a top priority for his organization.

But it’s also something that’s already happening. In announcing its App Center marketplace at the show, it noted it’s already offering up some 1,300 partner-developed applications, add-on, and extensions to SAP offering ranged from the core ERP product to SuccessFactors and Hybris.

App Center as a marketplace now supports buying those applications directly from the partners offering them, while creating a single place for customrers to manage purchases and billing. The company is betting that having a stronger marketplace, with partners on board, will help partners who embrace its bundling approach to get in front of more customers, and more seamlessly get their extensions and applications up and running for customers.

Sam Yen, SAP’s chief design officer, called the marketplace approach “the primary extension platform” for the company’s “digital core” of offerings going forward, and called it “the key thing to grow this ecosystem in the future.”