SAP to rely on channel for SME growth

Orlando – SAP’s (Nasdaq: SAP) SME executive for North America has committed the business unit to driving 45 per cent of its business through the channel this year, and to get there the ERP vendor is launching a number of channel initiatives to help the channel bring SAP into the SME market.

Among the initiatives unveiled Monday at SAP’s annual Sapphire user conference in Orlando are a business configuration tool to drive lead generation around the SAP Business All-in-One platform for the small business space, and the addition of IBM (NYSE: IBM) and HP (Nasdaq: HPQ) to SAP’s recently announced fast-start program, which is designed to get clients up and running more quickly with a pre-configured solution.

The vendors’ push into the SME is based on three pillars says Hans-Peter Klaey, president of SAP’s global SME organization: building on SAP’s strong brand recognition, developing the right solutions for the right spaces in the market, and leveraging a multi-channel strategy to drive growth.

“We want to have partners of volume, not volume of partners,” said Klaey. “We believe when a partner can add value in the right micro-vertical with the right product then we have the right match.”

In North America, in particular, SAP has set ambitious SME and channel-related targets. Last year says Glen Wada, senior vice-president and general manager of SAP’s SME organization in the Americas, his business unit had an internal goal for channel business of just 10 per cent. This year, he has upped that target to 45 per cent.

The focus is already paying off, with 120 per cent growth in Americas SME channel business in the first quarter of 2008, and will be fueled further by the expansion of SAP’s fast-start program for Business All-in-One to include IBM and HP. Each of the vendors will be working with SAP to develop pre-configurable solutions running on their respective hardware platforms, tailored to achieve fast deployment and implementation.

“Working together with the leaders in their fields and with (their) eco-systems, it’s a big opportunity for all of us to bring additional value and choice to the market,” said Klaey.

The solutions will be available through the SAP channel, and initially when a lead is generated SAP will match its partner with a hardware partner from IBM or HP, depending on the platform the client is interested in. Of course, if a solution provider is a partner with both SAP and IBM or HP, it can deliver the solution itself.

Also new from SAP is a Web-based solution configuration tool. It allows a prospective customer to explore and cost a All-in-One configuration, both hardware and software, generating leads that can be passed on to a channel partner. Executives say the goal is to show potential customers an SAP solution for the SME isn’t as pricy as they might think.

Paul Edwards, director, SMB and channel strategies at IDC Canada, says SAP is taking a multi-channel approach to the SME and that’s important, because not all SME customers want to buy the same solutions in the same way. They still need to have a direct business, but Edwards says SAP has done a fairly good job of setting rules of engagement and thresholds to govern the direct/indirect split.

While he’s unsure of how closely SAP will be working with HP and IBM, Edwards says as long as its configurable the fast start program looks like a good way to go, with one box solutions becoming more and more popular, and necessary, in the SME.

“Vendors are realizing there’s not an overabundance of partners that can act like an SI and have that up-front guidance, and customers can’t afford that anyway,” said Edwards. “You’ve got to bring it down to a solution that is easier for the partners to wrap their skills around, so there’s not an overly large investment partners need to make to take it on.”

As for the SAP Americas goal if driving 45 per cent of its SME business through the channel, Edwards says that’s a big increase and SAP will be challenged to build the partner capacity necessary to facilitate it.

“I don’t think the skill sets required to sell SAP in the SME, having that business assessment and deployment acumen, is necessarily something a lot of SAP partners have,” said Edwards. “I think vendors like SAP need to step in and help, and they’re trying to do that by setting things up like SME specific sales and implementation methodologies.”

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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