SAP aiming at mid-market, SuccessFactors president says

LAS VEGAS – SAP SE might be known as an enterprise software firm, but in pursuing new customers it’s aggressively reaching out to mid-market companies with between 1000 and 10,000 employees, rather than small and medium-sized businesses (SMBs), the president of SAP’s signature human capital management (HCM) platform, SuccessFactors, said yesterday.

During an Aug. 30 Q&A session with analysts and the media, SuccessFactors president Mike Ettling did not deny that SAP had committed to reaching 2000 customers with its flagship SuccessFactors Employee Central offering by the end of 2016 – yet according to figures provided by the company, SAP had only sold the platform to around 1250 customers by the end of Q2 2016, which ended on June 30.

Reaching another 750, according to the attendee questioning Ettling, would require reaching two thirds of SAP’s installed customer base.

“The reality is… we’re placing a huge investment into the mid-market,” Ettling said in response. “We really want to build an ecosystem of maybe 40 or 50 partners worldwide who are highly empowered, have become really wealthy from their arrangement, and really build on our mid-market base.”

“If that strategy works – yes, we’ll be at 2000,” he said, noting that he wasn’t pushing into the SMB market because he believed its HR space was too crowded.

“We’d rather focus on markets of 1000 to 10,000,” he said. “Those companies have the same complexity requirements and diversity issues regarding geography as [everyone else], but they’re not very well served today.”

Ettling also mentioned SAP’s recently launched profit-sharing partner program, which allows channel partners to earn a share of revenue from contracts they sign – in theory, building a viable business in the process – and SAP to be more selective about the partners it collaborates with.

“They are around 2000 SAP vendor partners,” Ettling said. “I don’t want 2000 partners… There’s criteria partners have to meet to qualify, and then they’ll go on their program.”

In an ideal world, Ettling said, SAP won’t be collaborating with more than 50 partners, while those it chooses will be capable of investing in an adoption service for the customers – and since those partners exist already, he said he didn’t imagine new partners would be registering for the program anytime soon.

“The new program’s a whole new business model,” he said. “It isn’t about a sales channel, it’s about an ongoing customer management channel… We’re not going to rely purely on the partners to just sell. It’s more about their ongoing lifetime management.”

Constellation Research vice president and principal analyst Holger Mueller, who attended the discussion, said that Ettling’s comments make sense for SAP, because the company has fewer sales staff compared to some of its competitors.

“The definition that Mike shared of one to 10K is in the sweet spot,” he admitted. “But I would say it’s going to be hard for SAP to reach companies with under 5000 employees, or 3000 employees, because they’re really working for an SMB.”

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Jim Love, Chief Content Officer, IT World Canada

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Eric Emin Wood
Eric Emin Wood
Former IT World Canada associate editor turned consultant with public relations firm Porter Novelli. When not writing for the tech industry enjoys photography, movies, travelling, the Oxford comma, and will talk your ear off about animation if you give him an opening.

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