SAP Readies Cloud Channel Program, Seeking New Recruits And Offering Transition Help For Current Partners

SAP is preparing to launch a new initiative to recruit born-in-the-cloud strategic service providers and help current solution provider partners add the vendor's cloud applications to their product offerings.

Few details about the new Cloud Business Partner program were disclosed Monday at SAP's Global Partner Summit in Orlando, the company's one-day partner event that preceded Tuesday's start of its Sapphire Now conference. But the program's elements are expected to cover the packaging and pricing of SAP cloud services offered through the channel, as well as new partner enablement and support services.

"With this new program, I think we are going to be recognized as one of the cloud leaders in terms of business models for our [partner] ecosystem," said Rodolpho Cardenuto, president of SAP global channels and general business, speaking in a morning session. "I think it's going to be unique in the industry."

[Related: SAP Adds To Internet Of Things Portfolio With HANA-Based Software Packages]

Cardenuto noted that selling and supporting cloud services requires business models that are very different from the economics of selling on-premise software licenses.

"What we are doing is changing the business model to help our partners to transition from the traditional business to the new cloud business, to give our partners more options to manage the cloud," the channel chief said. "It's a program and a business model."

In addition to helping current partners add cloud products and services to their portfolios, a goal of the new program will be "to attract more cloud partners, born-in-the-cloud partners," Cardenuto said.

The channel executive said the program would provide incentives and rewards for partners based on their level of involvement in selling cloud services. The starting level will include partners that identify prospective customers and provide the leads to SAP, but otherwise leave the sales and support to the vendor. The next level up will include partners that find new customers and close the sales. And the highest "customer lifecycle" of partner involvement will be comprised of solution providers that find new customers, close deals and implement and support packaged cloud services.

The program also will provide SAP's cloud applications packaged for specific vertical industries, according to Cardenuto, such as the SAP Ariba procurement and sourcing application packaged for discrete manufacturing, and the SAP Hybris omni-channel ecommerce application for retailers.

While the program's details remain under development, Cardenuto said the first phase of the program would begin rolling out early in the third quarter with elements implemented through the rest of the year. Phases two and three will roll out in 2017.

The new program will supplement the current SAP PartnerEdge program, not replace it, he said.

At least one partner welcomed the news.

"I'm very much looking forward to seeing what this new cloud program is going to be," said Amy Grubb, CEO of Cloud Consulting Partners, a Rancho Mirage, Calif.-based SAP partner that resells and implements the SAP SuccessFactors human capital management cloud application. "It's very much needed."

SAP acquired SuccessFactors in 2012 for $3.4 billion. But SAP, which built its business around selling on-premise business applications, tried to fit it into their old business models, Grubb said. The company's sales force, more used to selling on-premise software licenses, struggled with selling cloud services. And because deep discounts are a staple of software license sales, prices for SAP's cloud applications have varied widely even though partners and customers want set, transparent subscription prices, she said in an interview at the partner summit.

All that has added up to some partner frustration, Grubb said. But she was confident the new program would help. "I have no doubt they will figure it out for cloud," she said. "SAP is obviously very committed to the partner channel."

Cloud computing is a growing part of the business at Itelligence, a Downer's grove, Ill.-based solution provider that's one of SAP's leading channel partners. In an interview with CRN, Itelligence president and CEO Steve Niesman estimated that 90 percent of his customers are at some stage of evaluating SAP's cloud applications or the S/4 HANA application suite – some of the latter for a cloud configuration.

"Customers are much more open to putting software in the cloud," Niesman said. While his company has the size and scale to work with both on-premise and cloud software, he said some smaller solution providers might struggle to do both or transition to just cloud work. The new program, he said, sounds like a promising initiative to help such partners.

While SAP is best known for the number of "Global 5000" companies that use its applications, the Waldorf, Germany-based company has more than 300,000 small and mid-size customers, most of which are serviced by partners. The company's indirect sales are outpacing direct enterprise sales by a factor of two or more, Cardenuto said, and last year, 87 percent of SAP's net new customers were acquired through the channel.

Cardenuto said there are many small and mid-size enterprises [SMEs] in the U.S. and China, and in the short term, the company would "disproportionately invest" in channel efforts to reach those potential customers. "SME is a huge opportunity for us," he said.

The company has some 13,000 partners globally and about 2,000 are attending this week's conference. Last year, SAP significantly overhauled its PartnerEdge program, creating a single partner category instead of narrowly categorizing partners at a time when the lines between different partner types is blurring.