Building channel focus

As SAP broadens its product portfolio and expands into the SME space, it has also had to learn how to build a channel to reach a customer base outside of the traditional large enterprises that it built its software empire on

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Building channel focus
By  Mark Sutton Published  October 23, 2011

As SAP broadens its product portfolio and expands into the SME space, it has also had to learn how to build a channel to reach a customer base outside of the traditional large enterprises that it built its software empire on. Channel ME speaks to Eric Duffaut, SAP’s President of Global Ecosystem & Channels and newly-appointed head of Channels and Ecosystem for MENA region, Mazen Jabri, on how its new partner programmes have progressed.

SAP has been looking to reposition itself in channel terms, can you explain why?

Eric Duffaut: When I joined SAP six years ago, SAP was known for being a company that built complex solutions for solving complex problems in large companies. The question was ‘how do we go after small to mid-sized enterprises?’ I was recruited to think about how we could address this market segment. I designed the go-to-market for the SME, and in January, we went through a complete restructuring of our global customer operation. I now run eco-system and channels, that includes all types of partners, from large systems integrators, technology partners, software partners, VARs, and also alternative routes to market like our own Inside Sales force, and our web channel.

We have chosen to be an open innovator at SAP, innovation is back at SAP big time, we really want to be the best at what we do. We want also to be the best at partnering. We have three imperatives, for our vision to be, by the middle of the decade, a 20 billion euro company; to expand our margin to 35% and to touch one billion people with our software.

We have three imperatives that are critical to achieve these goals, that are very much linked to what we are doing in eco-systems and channels. The first is co-innovation. There are many things that we cannot do by ourselves. We have many partners that are planning to co-innovate with us.

Secondly, if you want to reach one billion users, you need to expand your route to market. We want to go deep in the SME market, and we are aiming to have 100% of this business driven by partners. We have been pretty successful, 65,000 of our customers are served through partners, and we want to expand that even further. The prime route to market in the SME sector will be partners.

We also want partners in the large enterprise segment that do things we don’t do well. If you look at a region like SAP MENA, we have 270 people, that is better than we ever had, but we need partners to be an extension of our service and sales force, where we don’t have the capacity or the capability to position. You will see partners becoming more and more important as a sales play in the large enterprise segment.

The final one, is how do we expand our service capacity, especially in a market like MENA which is an expanding market. If you want to sustain this software growth, and to achieve the margin expansion, you need to rely on a strong ecosystem as a force multiplier, as a service arm.

Many partners in the past used to complain that we compete on the service side, we are going to shrink this overlap, focus our service people on being market makers and enabling partners, and having partners as our prime source of service. Those are the three imperatives, they are pretty big, which is why partnering is becoming a core competency at SAP.

Do you think the channel’s perception of SAP has shifted?

ED: On a global perspective, the answer is yes, big time. If you go to events like SAPPHIRE partners are very excited, they understand that they are key to us, and hence we will focus on making them better; and they are excited by the business opportunities, they are excited by the innovation that is going on at SAP, that represents huge opportunities for them.

Partners are excited that our way of engaging with them is more predictable than ever before. When we tell a SME VAR we want this business to be 100% indirect, we are super clear. Predictability is everything.

Mazen Jabri: In MENA, we have a cleaner platform than the rest of the world, we only really started expanding in mid-2009. We realize how important this region is for the growth of our business worldwide, and how much it needs investment across the board.

We decided to adopt the new model, which is unifying all functions under one team, and driving the partner community to capitalize on the advantages. We are segmenting our customer base; we have the named accounts where we focus directly, that doesn’t mean we sell directly to them, but we have a direct relationship; and then the volume segment, which is driven 100% by partners. We will not sell direct in that area.

Because most of the economic growth in MENA is public sector driven, the only way SAP is going to be able to engage at all levels of the public sector is through partners, to go to the established partners, who have the experience and credibility, and make them SAP partners. We have recruited more than 20 partners in the past five months, in that segment by itself, to increase our ability to do business with the public sector.

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