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In a bid to keep pace with evolving technologies and business models, the SAP partner program will focus less on sales and more on keeping customers happy.
To facilitate this new direction, which SAP terms "next-generation partnering," SAP named Karl Fahrbach as its first chief partner officer in March. In the newly created role, Fahrbach will report directly to the SAP executive board, which Fahrbach said will "bring the partners very high into the agenda of the company."
The cloud has changed the enterprise sales model because it makes it easier for companies to move off applications and onto others. Because of this, the SAP partner program will begin to reward partners for keeping customers retained and happy, rather that strictly on sales, according to Fahrbach. Partners will also play a key role in SAP's plans to deliver its vision of the intelligent enterprise for customers.
"We need to stop looking at our partners from the selling or implementation perspective. They will also play a key role in helping our customers stay with us, making sure they see relevance in the solutions and that they get value out of our solutions," Fahrbach said.
The key to profitability in the cloud era rests with keeping customers for life, Fahrbach explained.
"We want to make sure that the [SAP partner program] rewards our partners more for the quality of the services they deliver, for how happy the customers are, for the feedback from the customers, for renewals and retention," he said. "That's the future of a cloud partner model and that's exactly what we're implementing with the next-generation partnering."
Shift from sales to customer satisfaction may help smaller partners
Ben McGrail, managing director for the U.K. and Ireland at the SNP Group, is cautiously optimistic that SAP's next-generation partnering initiative will benefit smaller partners. SNP Group is an SAP partner based in Heidelberg, Germany, that works with customers on projects like S/4HANA implementations.
Traditionally, SAP has worked most closely with big systems integrators (SIs) that sell S/4HANA licenses, which is not what SNP Group does, according to McGrail.
"We don't do that, we sit client side and solve problems for the customer, which is good for the customer because we're much more independent, but our relationship with SAP is less close," McGrail said. "We have a bit of a complicated relationship with SAP because we don't really sell their software. We're a strategic partner in terms of getting people onto S/4 quickly and accelerating adoption, but down on the ground sometimes we come up in competition with SAP Consulting, so at that level we're more of a competitor.
SAP's traditional emphasis on sales has resulted in the company favoring the large partners and SIs, while the shift to customer satisfaction, retention and innovation may help smaller partners, according to Joshua Greenbaum, principal at Enterprise Applications Consulting.
"Today's little partner is tomorrow's billion-dollar solution exchange partner, but that realization has not been as deeply understood in the SAP partner organization as it should have been," Greenbaum said. "Frankly, it's been one of the real open sores in the SAP strategy that they haven't been able to manage their small partner network and nurture these companies in a large-scale and effective way. They have these small entrepreneurial pockets. SAP.io has its own little incubation thing going on; they were incubating a lot with HANA, but the larger structure was always lacking in cohesion and support."
Partners can tap into innovation in the cloud
Many customers are "cautiously" using larger SIs for S/4HANA and SAP Leonardo projects, but are also using boutique partner firms and specialist SAP services units, according to Vinnie Mirchandani, founder of Deal Architect.
However, there's a lot of innovation that SAP can tap into from partners in the cloud.
"There's a new category of partners developing new functionality on the SAP Cloud Platform," Mirchandani said. "Enterprise platforms have not developed vibrant stores like Apple has around IoS or Amazon around its fulfillment platform, and that's SAP's big challenge and opportunity -- to scale the store in terms of these partner revenues, not just talk about number of partners."
The smaller, more innovative partners are the future -- and the present -- of the company, according to Greenbaum.
"You can't go into a fit-to-standard, cloud-based world and spread your market across deep vertical and micro-vertical industries and multiple geographies without having partners to fill in those gaps," Greenbaum said. "That's just not going to happen, so I hope this regime change really is recognition that this stuff has to shift 180 degrees in a new direction, and I'm pretty optimistic that it will."
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