2 min read

SAP wants half its revenue through partners

The business software vendor is determined to take an even larger portion of its business through the indirect channel

Having already set an ambitious goal of moving 40 per cent of its overall revenue through the indirect channel by 2015, enterprise software vendor SAP AG (NYSE: SAP) recently upped the ante: the new target is 50 per cent.

SAP co-CEO Bill McDermott threw down the gauntlet at a meeting of SAP’s global channel leadership team this summer in Barcelona. Currently, about 17 per cent of SAP’s overall revenue (including small and medium-sized enterprise (SME) and large enterprise) moves through the channel, so they have a tough hill to climb.

“It’s an exciting place to be in the channel right now at SAP,” said Rene Giguere, vice-president of SME for SAP Canada.

SAP has taken a number of steps in recent years to shift its culture from a direct-sales focus to one that embraces the indirect model. The evolution began in the SME by committing to taking most, if not all, SME sales through partners. And late last year in a corporate restructuring, the SME and channel organizations were merged in one business unit to further the channel focus. The restructuring also saw the appointment of a global channel chief, Eric Duffaut, who reports directly to SAP’s co-CEOs.

Another key step came this spring when SAP opened up the large enterprise market to the channel, allocating 4600 net-new enterprise prospects (including 500 in Canada) to the indirect channel through its greenfield program.

Giguere said SAP is counting on the channel to drive growth in a number of key areas. One is mobility, and SAP is also developing an “app-store” to allow ISV partners to showcase and sell applications and add-ons to SAP’s mobile solution, driven by its Sybase acquisition. They’re also exploring OEM relationships for technology such as in-memory analytics, and Giguere said they’re close to signing distribution agreements in Canada to move more product to partners through the major distributors.

With overall channel revenue in Canada also close to the 17 per cent level, and the SME focus of Canada’s economy, SAP has a tough hill to climb in Canada but Giguere said he’s confident they’ll get there.

“I feel good about it,” said Giguere. “Opening the pure net-new (Greenfield) play and the large enterprise will fuel the 50 per cent.”

He added they’re already well along the way in Canada, exceeding this year’s goal for growing their prospect pipeline by June. Now the challenge, of course, is converting prospects into sales.

Another area of growth will be around Business ByDesign, SAP’s hosted mid-market ERP offering which launched in Canada early this year. Nine customer deals have been signed in Canada so far, and seven partners have signed-on to take it to market.

Six of those partners were existing SAP mid-market partners, which is a shift from the thinking at-launch, when SAP thought most ByDesign partners would be new to SAP. Giguere said they were worried the hosted offering may cannibalize partners’ on-premise practices, but instead partners have seen it as complementary, allowing them to offer more options to potential clients.

Follow Jeff Jedras on Twitter: @JeffJedrasCDN.