SAP positioned for explosive growth in channels - that means SME

In 2010 SAP got very serious about channels, setting out to make profound transformational change. Not satisfied with incremental progress, SAP was looking to change the very DNA of its channel programs. A year ago, there were 5 different channel programs. Today there is one. Recruiting from the outside and shuffling the deck internally resulted in a 90% change in the management team. According to Kevin Gilroy, SVP Ecosystem and Channels, the current team is fired up “to make history.”

What’s happened in the past year? First of all… a lot of training. No longer is the channel just about the P&L, it is also about the balance sheet. There was a concentration on speeding the time to revenue and understanding the value of having an off-payroll sales force. But to keep those off-payroll channel sales partners interested and engaged, SAP needed to become more predictable. In August, SAP Business ByDesign, and SME in general went 100% channel. Since then only 2 or 3 exceptions have been made for direct sales.

Secondly, the new management team challenged existing processes. Here there was a definite advantage in having new eyes taking a fresh look at the old ways of doing business. They ripped out non-value added steps and sought to reduce disruption for the customer. They went so far as to remove the operational flavor of the team and replace it with a focus on the experience. The directive from management – if you aren’t improving the experience of the employee, partner or customer, either re-engineer the process or don’t do it. One example, the “experience” team took a 20 page leasing document and reduced it to 2 pages, reducing the turnaround from two weeks down to one day. The goal is one page, one minute turnaround. They have also simplified contracts so as to simplify the conversation and not to scare away customers.

The focus in 2011 is on meeting the needs of the SME. This means:

·         Delivering more choice and more packages tailored to the SME

·         Increased sales capability and capacity through channels and inside sales

·         Building a volume-based marketing engine. Marketing dollars will not be distributed evenly across the channel. SAP will pour more money in to fuel those with marketing engines.  

·         Continue to work on the” experience”. Optimize operations and processes around the needs of the SME users and partners.

But probably most important of all is to work on market perception. The ultimate objective of course is to turn the channel into a real volume business and this means selling more to smaller companies. SAP still is viewed as the 800lb gorilla in the market and many SMEs simply assume it is not for them – either it is too complicated or too expensive. Over the past year in talking with both Business ByDesign and Business One customers, it was not unusual for them to say to me, “I never thought I would be here. Who would have thought SAP had a solution for me that I could afford?” They don’t realize that 79% of SAP’s 109,000 customers are SME. That translates to 86,000 SMEs running SAP.

I think that Business ByDesign is going to play a very significant role in changing the market perception. ByDesign has the advantage of being a brand new product, engineered for the SME to reduce complexity. In fact SAP is finding it to be a real door opener that may lead either to a SaaS ERP (ByDesign) sale or an on-premise sale of All-in-One or Business One. Once that door is open, many are finding the price tag of the on-premise solutions is far more affordable than they assumed.