Cloud computing and digitalization represent a fundamental business model shock to every industry, and nowhere is this more apparent than across the SAP partner ecosystem, where thousands of dedicated innovators serve the company’s fast-growing small and midsize enterprises (SMEs).
While the phrase ‘digital transformation’ may be ubiquitous market-wide, faster profits for partners can be more elusive. This is precisely why SAP is evolving its channel strategy to provide strong options for a diverse ecosystem who offer on premise, cloud and hybrid solutions.
“The industry has struggled figuring out the best way to help partners make the jump to cloud and be profitable. What excites me is that we have a business model that, no matter who you are as a partner or what you’re trying to sell, we have different options, levels of engagement, profitability, training and assistance to help smoothly make that transition,” said Meaghan Sullivan, Vice President of Global Channel Marketing & SME at SAP. “We continue to offer great programs for our traditional, on premise partners. Now we also have a whole new group of channel cloud programs helping traditional resellers make the transition to cloud. And, we have programs for native cloud partners to come in right out of the gate and experience profitability.”
Path to Faster Profits
SAP PartnerEdge Cloud Choice is one example of how the company’s channel engagement approach has changed in response to the emergence of cloud. Unlike a traditional reselling model where the partner manages virtually every aspect of the transaction, SAP supplements the partner’s activities with elements such as contracting, invoicing and collections while providing a predictable revenue stream. Customers pay a subscription to SAP, a percentage of which goes directly to partners at the beginning of the customer contract and every year across the life of the contract, including on renewals.
“Cloud’s monthly subscription model meant that some partners suffered losses while waiting for revenues to come in and simultaneously trying to build a sufficient customer base for profitability,” said Sullivan. “The profit option of SAP PartnerEdge Cloud Choice provides partners with greater opportunities to invest in their own business, including digital marketing to gain new customers. No longer does a partner have to fear going into the cloud and waiting years for profits.”
Sullivan added that SAP partners have provided positive feedback throughout the development and piloting of the new program.
From Buzz Phrase to Concrete Business Outcomes
Agile partnerships are the hallmark of digital ecosystems, exemplified by SAP’s wide range of programs supporting channel partners working with companies of all sizes, including SMEs. In fact, 80 percent of SAP’s customers are SMEs, and 85 percent of new SAP S/4HANA customers in the first quarter of this year were SMEs.
“SAP has built out a channel engagement continuum that supports partners in the cloud however they want to pursue it,” said Susan Reynolds, Global Vice President of Partner Ecosystems at SAP Anywhere. “Partners can refer, sell, or deliver services – whatever their customer needs. It’s not just our customers who are on a journey of business transformation, partners are using more digital and social in every aspect of running their business.”
For example, the SAP Anywhere Referral Program rewards organizations with a one-time finder’s fee for referring leads that convert to fully paid deals with customers. According to Reynolds, it’s tailor-made for smaller companies that are not necessarily part of SAP PartnerEdge. “SMEs look to peers for information and advice, which is why we developed this referred social network selling program for any company whether they are our customer or partner,” said Reynolds. “I tell organizations you can step in at the level you’re most comfortable with, and they love that. For partners, it’s a fast and easy way to generate revenue while building relationships across our powerful ecosystem.”
Ecosystems are central to the promise of cloud computing, delivering untold innovation power to companies regardless of size. The good news for SAP partners is that they can expect more profits as the company’s engagement programs evolve in sync with digitalization.
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