The new SAP initiative provides partners with packaged cloud solutions, with the partner adding their own IP. It also contains go-to-market and marketing initiatives to help the partners sell the packages.
SAP has added another component to the cloud strategy they have built out through the Cloud First Profit program with new SAP-qualified partner-packaged solutions. They are designed to provide repeatable solution packages that partners differentiate with their own IP. The program also emphasizes joint collaboration and go-to-market with SAP’s direct salespeople, and assisting partners to sell through this collaboration, and some new marketing initiatives.
“Since 2015, when board of SAP asked us to look at midmarket and we decided to do it with partners for scalability, we have wanted to replicate our on-prem success in the cloud and scale that business,” said Karl Fahrbach, SVP, Global Head of Channels at SAP. “This was our 2020 Strategy, and the results have been very successful so far. Mid-market cloud revenue has been growing at triple digits. In 2017, our channel growth in the midmarket has been faster than our direct growth, which was not the case in 2015 and 2016.”
Fahrbach said that SAP has invested a lot in their Channel 2020 Strategy, to attract new partners with a different DNA, who were born in the cloud, and to make sure SAP’s programs are attractive for them.
“We launched our Cloud First Profit program at the end of 2016, and today almost half the business in this space is through this program,” Fahrbach said. “We have been able to double the number of superstar partners in the last year. We have also added new DNA with more than 600 new partners with a pure cloud focus in the past six months. 14 per cent of our revenue is done by these new cloud players we have brought in.”
Fahrbach said that this initiative also makes sure SAP’s direct sales force understands the value of working with partners in the cloud and understands the rules of engagement. He also said SAP has transformed the way their partner business managers deal with partners.
“We have added to Cloud First Profit with additional initiatives like Cloud Accelerator, which helps partners to run a marketing department,” Fahrbach noted. “Marketing in cloud is more important than on-prem because you need to generate higher volume.”
The new packaging strategy is the latest initiative.
“Building packages will be key for a ‘land and expand’ strategy,” Fahrbach said.
“When we developed our channel business with SAP Business One, everything was packaged around on-prem and we had a very ERP-centric go-to-market strategy,” said Bobby Vetter, SVP, Global Partner Organization Portfolio Management, at SAP. “Now, the development of cloud solutions has changed that to an integrated suite of cloud solutions, connected with other cloud solutions, like analytics, Business Objects, warehouse management, Ariba, and a cloud platform for IP development, so we needed to expand our packaging to address a new set of solutions.”
Vetter stressed that these SAP-qualified partner-packaged solutions are detailed solution prescriptions, not glossy overviews.
“These are not 10-page PowerPoints,” he said. “They are well-defined pre-designed configurable solutions, based on a bill of materials.”
Sten Frellesvig, SAP’s Director, Partner Packaging and Commercial Sales Engagement, explained the details of the packaging strategy.
“There are three overarching design objectives,” he said. “First, we want to use this as a vehicle for closer engagement between partners and the SAP sales force, making sure partners are aware of the packages and SAP’s people are aware of the specific partners. This is very much focused on a joint go-to-market strategy. We have built an app that tracks every package, and makes sure there is complete visibility across internal sales teams, so that they can find partners suitable for specific opportunities.
“Second, we wanted a framework that spans the SAP solution, so that they can be sold in repeatable fashion, in volume, at a low price, in the mid-market space. That requires one overarching program that you can tap into.”
The third element is new marketing related partner benefits around the program, notably the ability to use a logo, and online exposure on SAP.com, where the partner packages will be published so that prospects can see them.
“These new benefits will encourage partners to invest in packaging solutions and joint go-to-market,” Frellesvig said.
“Every package will have its core components, but the partner services will be required to bring the software alive,” he noted. “That will also allow the partners to differentiate themselves from from each other, and target specific verticals. There will be a rigorous qualification session around each package to make sure that everything is clean, and the partner has the ability to deliver.”
The marketing components around the packages designed to increase awareness among prospects and impress them with the partner’s validation are a key part of the program – but not the whole story.
“We have had a lot of sales people who did not even know what partners can offer, so making this more visible internally is a key objective,” Vetter said. “These packages will create much closer collaboration with partners. Partner IP will be a key differentiation in them, and we can help them sell it.”
“From planning to building, SAP will work closely with the partners, but this is also about ensuring that partners are successful in selling, which is why the marketing aspects of this are indeed very important,” Frellesvig added.
“By introducing this level of transparency we are hoping that partners who already go to market in a packaged approach will be able to create more discrete packages for specific geographies,” Frellesvig said. “This extended transparency lets partners be more selective about choosing target markets and lets us advise them on where they see the white space.”