SAP moving towards an affordability over cost strategy

NEW YORK – At the 10th annual SAP SME Summit, SAP’s channel chief, Rodolpho Cardenuto said the No. 1 priority for global channels & general business group is to change the narrative from cost to affordability.

“Customers in the SME are not looking for cheap,” he told a group of media and analysts at the Growth Matters SME Executive Roundtable. This new approach is a major step in SAP’s channel journey, which got its start roughly a decade ago. Cardenuto said, back then the technology was never a big equalizer as it is today. SAP is providing the same technology in its HANA platform, SuccessFactors and Hybris E-Commerce to both large corporations as well as those customers in the SME.

“It’s the same. Before in on-premise there were restrictions with modules and licensing. But now we are making it affordable,” Cardenuto said.

Cathy Daum, senior vice president of global channels and general business at SAP EMEA, said there will be fixed price and fixed solutions with predetermined implementation along with subscription costs that cover software and implementation. “This approach provides for more predictably for the customer.

Nigel Montgomery, research director of Gartner, said the challenge for many companies is trying to establish cost upfront. “In some ways trust is based on the vendor enabling customers to find out what their costs are going to look like rather than the open-ended situation most find themselves in now. Vendors, historically, have not been very good at establishing longer-term costs ahead the game,” Montgomery said.

SAP Gold Partner Third Wave Business Systems made a decision five years ago to solely support the SAP Business One platform because it was able to handle the changing requirements of small companies along with the ability to implement upgrades without breaking the bank.

“We see our customers growing with Business One at the core. Some larger customers too. What’s important (for the channel partner) is as they grow we can come in and implement expense reporting with Concur or invoice processing solutions and e-commerce with Hybris,” said Korey Lind, CEO of Third Wave Business Systems.

Lind added that the majority of Third Wave customers do not have a Chief Technology Officer or even an IT manager and their business model never changes if the customer is on-premise or in the cloud or if they scale up or scale down as its revenue comes from consulting services.

Hernan Marino, the COO of marketing and head of SAP global channels and general business, told CDN about three touring clowns in Brazil who are an SAP Business One customer. “We said thanks but we had to ask them why? And, the three clowns said SAP Business One allows them to manage their tours and their costs so they know if their tour is profitable or not. It gave them a sense of if they are doing good or just having fun. This is our main competitive advantage. You can’t outgrow SAP,” Marino said.

Rodolpho Cardenuto, SAP Channel Chief at the SAP SME Summit in New York

Cardenuto said that the strategy today is partner first. SAP believes the partner segment can address the SME because this base of customer is moving fast to the cloud. Of the 365,000 customers SAP has worldwide, more than 300,000 of them are in the SME segment and of that base 80 per cent are handled by the partners.

SAP is also segmenting the SME down further. Approximately four years ago Mark Aboud, the President of SAP Canada and a CDN Top 25 Newsmaker, was promoted to global head of SAP commercial sales, to run an area of the SME that is $300 million and down. This segment too has 80 per cent coverage from the channel.

Aboud’s group has a different go-to-market motion and does not include traditional positions such as inside sales reps. Aboud also ripped out all the telephones in this group. “We thought the voice mail/email sales motion was a dead model. The telephone is dead and we moved to digital tools for three areas: social, video and virtual and content. We physically removed all the phones. There is no more dialing for dollars. Going digital has become a competitive weapon and improved the customer experience and fueled our growth,” he said.

The average age of the digital sales professional in this group is 28 and what Aboud found was that most of the buyers are digital too. The plan going forward is to provide these digital tools to the channel as part of a catalogue that features Virtual Studio in a Box and LinkedIn Sales Navigator. Channel partners will be able to obtain these tools by using MDF funds.

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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