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SAP aims to partner on cloud solutions

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SAP may not be traditionally known for its channel partnering, but the company is driving a channel-centric go-to-market for its applications and cloud services.

In fact, about 80% of SAP’s business is currently to SME customers – and this is delivered through 12 000 resellers around the world.

With its cloud offerings, the company expects to extend this partner ecosystem, particularly in the South African and African context.

Simon Raeburn-Ward, who heads up partner recruitment and expansion for EMEA, explains that cloud services have made their way into every consumer’s life through things like Netflix, Spotify and Adobe.

And customers are starting to bring these kind of solutions into their businesses, he says.

The potential for the South African market – for just subscription revenue – is R1,6-billion, according to Gartner. And it’s expected to grow to R2,4-billion by 2018.

“That’s why we want our existing partners to move to cloud; and new partners to jump into cloud,” he says. “We can show you what the addressable market is for you – and help you deliver on the return.”

SAP itself is aiming for revenues of between E26-billion and E28-billion by 2020, and is confident that up to 75% of this will be through services and cloud subscriptions.

Cloud is around different innovations and deployment methods, Raeburn-Ward says. It offers fast deployment, more frequent innovation updates, agile development, configuration and integration; and lower capex with faster time to value.

For partners, this means that their customers need to understand what digital transformation means. The IT focus has to move from process to business models.

Partners can either lead their customers to digital transformation, Raeburn-Ward says. “And to do that you need to transform your business as well.”

So why should resellers consider cloud. “Your business is about profitability, revenue and growth.

“With cloud the gross profit is actually higher and you can increase productivity and growth.”

What this really means, he adds, is that the company valuation is much higher – up to four times higher, in fact.

The fundamentals of cloud economics means the business has to change.

“You have to think about customer acquisition costs. You have to identify how you can reduce them, and how you can scale them.

“Once you install a base solution, you need to look at the additional elements you can sell a customer. So what can you do about building IP; what add-ons will add to the incremental value?”

This also means the sales cycle changes, Raeburn-Ward adds, and resellers need to be talking to customers all the time.

“You need to look at the lifetime value of the customer. And this means you have to add value all the time.”

This ultimately adds value for both the reseller and his end user customer, Raeburn-Ward says. “There is a huge opportunity for partners.”

Currently, there are about 65-million SMEs in the world, and they are responsible for about 65% of the total spend on public cloud. About 295 000 of these SMEs are currently SAP customers, so there is massive potential opportunity in this market.

Raeburn-Ward believes there are some compelling reasons to partner with SAP. First and foremost is the strong brand that SAP brings to the party.

“We’ve been around for the last 40 years, and we have recently evolved to make it easier for partners to do business with us.”

The company is a proven market leader, he adds, and offers technology across solutions, industries and customers.

This means the partners can offer increased customer satisfaction while quickly establishing credibility. “With SAP, partners can reduce risks and accelerate sales cycles.”

In addition, there are very clear rules of engagement in the SAP model, with 100% of the SME business going through the channel.

SAP’s partner programme, PartnerEdge, lets resellers enter the programme at the bottom and work their way up the tiers depending upon the skills and specialisations.

Benefits of partnering with SAP include building skills, driving demand, expanding reach, earning rewards, and improving economics.

This gives partners the opportunity to sell more, learn more, improve their bottom line, improve their cash flow, and build wealth.

“SAP has a partner-focused go-to-market strategy,” Raeburn-Ward says. “General business and SME all goes through the channel. And there is a massive opportunity for partners here in South Africa.”