SAP turns aggressively to the channel

When Jeff Watts began managing SAP Canada Inc.’s channel, he slowly transformed the traditional enterprise ERP direct vendor into a channel friendly small-to-mid-market enterprise (SME) player.

But the plan for methodical change was scraped after SAP announced its goal of attaining 150,000 new customers worldwide by 2010. Watts, the division’s senior vice-president for marketing and alliances, is now putting his foot on the gas pedal to rapidly increase the number of channel partners here.

SAP Canada’s portion of the lofty mandate is 4,000 customers. With its current roster of 600 customers, up by 115 since 2004, Watts needs to deliver another 3,400 accounts in four years.

Prior to joining SAP Canada, Watts built 3Com Canada’s channel in the late 90’s. He says he understands the only way to achieve the company’s goal is to dramatically increase its market share in the small-to-mid-market business (SMB) sector by partnering with the channel.

Currently, the number of partners sits at 26. Watts plans to recruit another 10 to 12 this year. The maximum number of partners he wants is 40.

To help Watts, SAP is quickly developing either a hosted or on-demand CRM solution for sometime this year, expanding its line of partner-developed business management applications for SMEs and launching an online channel partner solution network.

The new applications, which will be built on the SAP Business One platform, are among the first certified under the company’s expanded PartnerEdge channel program.

With that SAP inked 12 new partnerships with independent software vendors of which two are Canadian: Ville de Saint-Georges, Que.-based N’Ware Technologies Inc. and Toronto’s Radio Beacon.

Carl Marin, vice-president of Radio Beacon, said SAP Canada provided a profitable alternative for its Windows-based Warehouse Management System. The solution provider has been able to boost its customer base by 50 because of SAP.

Free hand
“They are giving us carte blanche when it comes to margins,” Marin said. According to him, SAP Canada has placed no restrictions on the software and Radio Beacon is letting the market dictate the price.

In the PartnerEdge program, margins on the products vary from 15 per cent to 45 per cent, Watts said.

Marin believes Radio Beacon’s success with SAP lies in the seamless integration of its Warehouse Management System with SAP Business One. “It enables customers to view the application as a SAP Business One application,” he said.

“People are voting with their feet,” Watts said. “SAP is focused on customers. We want to make well-run businesses over acquiring businesses, which is in my mind distracting.”

SAP’s PartnerEdge program is a points-based plan involving customer satisfaction scores, volume, number of staff trained, solution offering and customer references.

In terms of the more lucrative consulting and services play, the subsidiary is only looking for 20 per cent of that business. The remaining 80 per cent is for the partners, he said.

There is also a deal registration progam.

Of the 600 current customers, 60 per cent are considered SMEs, which Watts describes as companies with less than $250 million in revenue.

“It is interesting because people believe SAP has only large business customers, but in reality we are a small business company,” Watts said.

Which is why getting the right partners is paramount for Watts. “The right partner has to understand business applications and be prepared to invest long term with customers and SAP. The right partner has to have the right technical savvy and understand customer satisfaction. What we do not want is a partner who shows up and says, ‘I have SAP, too’.”

To that end, Watts revealed SAP Canada’s leadership team is compensated on customer satisfaction to the tune of 10 per cent of pay. “It is all about accountability. You can pick up the phone and if it is about the channel you get me,” he said.

SAP Canada’s channel path wasn’t paved with roses. The subsidiary experienced a major bump last year when the RAM Group, which had a contract for selling the SAP Business One American Express Edition, went bankrupt.

According to Watts, the product had a low uptake in Canada. “Amex version, if you will, was not well embraced in the Canadian market.”

The small number of customers were helped by SAP, he said. Watts said it was an expensive exercise, but what he found interesting about the RAM/Amex story was the message it sent to partners.

“The message is that SAP is here with you and not just when things are going well,” he said. “When the chips are down we will shoulder (the burden) with you and together we will push the wheel and make sure the customer is taken care of.”

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Jim Love, Chief Content Officer, IT World Canada

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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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