SAP sees Cloud Choice Profit gaining momentum

Rodolpho Cardenuto, president of global channels and general business for SAP

Rodolpho Cardenuto, president of global channels and general business for SAP

ORLANDO — It’s been almost a year since SAP introduced a new, optional model for partners to transact its cloud offerings, and the software giant says the Cloud Choice Profit program is gaining momentum. In fact, by the end of this year, it expects it to be the dominant model for partners.

Rodolpho Cardenuto, president of SAP global channels and general business, told attendees at the company’s Global Partner Summit, held here with its SAPPHIRE Now conference, that Cloud Choice Profit is rapidly climbing the charts. The company took a country-by-coutnry approach to rolling the program out, going from “a handful” of countries in the fourth quarter of 2016 to 46 countries today.

Over that time, Cardenuto said, the program has expanded from five per cent of SAP’s overall cloud business in the final quarter of 2016, to 18 per cent of the comapny’s total cloud portfolio in the first quarter of 2017.

“This is the business model of choice for the cloud business,” Cardenuto said. “We expect Cloud Choice Profit to be responsible for 75 per cent of our cloud business by the end of the year.”

Cloud Choice Profit (CCP) is part of an umbrella of cloud business models under its overall PartnerEdge program.

The company touts Cloud Choice Profit as a way to tackle partner challenges with cloud economics, particularly during the transition from a “traditional” on-premise project business towards the cloud. Under the model, SAP takes over contracting, invoicing, and collection of customers’ cloud purchases, although the partner retains control of the customer relationship, and arranges or delivers services around the offering. Under the model, partners get a payment each year the customer retains its SAP cloud-based software.

SAP promotes it as a way for solution providers to get involved in cloud software without risk, and without the need to actually resell the software, reducing risk, and as SAP sees it, opening up flexibility for partners to do more, lower-touch sales approach, promoting the partner growing in terms of number of deals, even if overall revenue per deal declines.

In addition to providing an easier way for traditional on-premise partners to ease their way into the cloud model, the company sees it as a way to bring aboard new partners, particularly those who have a background in line of business, or whose background isn’t in technology at all.

The program’s launch comes as the company sees cloud sales accelerating, mostly a function of customer demand. Karl Fahrbach, head of global channels at SAP, told at the event that while it’s been evangelizing the need for partners to offer cloud options for a number of years, since the launch of CCP, he’s hearing more and more from partners whose customers are insisting upon it.

“Seven years ago, the demand wasn’t there, the speed of deployment wasn’t there. We’ve seen this hitting us over the last six to nine months,” Fahrbach said. “New partners expect business models they can completely monetize, and that’s what we have with the Cloud Choice umbrella.”

Currently, that umbrella contains the aforementioned Profit model, as well as a Referral model option. Fahrbach declined to discuss specifics of additional models under cloud choice, but confirmed SAP is likely to introduce additional models in the future.