The changing SAP cloud partner channel

While Jon Reed was at a recent SAP partner conference, he recorded a conversation with my good friend Brian Sommer. (See video above.)

For those unfamiliar, Sommer is ex-Accenture and is deeply seasoned in the partner channel business. That means when he offers insights, they are delivered from a position of deep knowledge and experience. His summary at ZDNet makes cracking reading. Sommer summarizes:

• Business ByDesign is the Dr. Pepper of the SAP product family – ‘so misunderstood’.  It shouldn’t be but it is. Clarity around its ever changing place in the SAP product lines could go a long way to help sales, give comfort to the resellers championing it in the market, etc.
• Business ByDesign (and other SAP SMB solutions) won’t get the industry vertical build-outs that the market demands unless SAP provides a lot of the core application functionality. ByD is quite vulnerable on this point for now. How do you get partners to build all of the needed vertical solutions is something that vexes other software vendors, too.
• The re-branding of SAP as more than just a seller of solutions to really big firms is a great idea and maybe a few years overdue. This re-positioning may really help the channel partners who sell to the other 99% of SAP’s customers and prospects.

Although he doesn't say much about Business ByDesign (ByD) in the video, he makes a couple of important points:

1. SAP needs to get far more busy in micro-verticals if it is to compete successfully in the small and medium business market.
2. Partners transforming to cloud offerings will find that they need to be far more like consulting partners with industry expertise on offer. SAP will need to provide more support. 

It is interesting that in two other videos recorded by Reed, partners reflected in more detail on these points. For example, Leo d'Araujo of Beyond Technologies said that while his firm is very busy on ByD projects, he feels that partners need more support. Tom Schwab, VP business development at HCL talked about how his consultants talk the language of business as a competitive differentiator.

Other than SAP, NetSuite is the only vendor that has what I would call an active partner channel. In both cases, it seems to be taking a significant amount of time to get partners to be successful. D'Araujo for instance started his firm's ByD journey a couple of years ago. At NetSuite, CEO Zach Nelson has the made a point on the last couple of earnings calls to say that his company's partners had contributed heavily to revenue. That's taken time as well.

In conversations with channel specialists and players, it is clear that unless the channel firm was set up as a 'cloud first' business then the changes needed to establish that mindset are not trivial. In SAP land, that change is made more troublesome by the fact there is so much talk about hybrid deployments, where some functions remain on premises while others happily go to the cloud. I can see why that creates tension. The cloud model is different across multiple dimensions including business model, delivery expectations and delivery methods.

I'm not as convinced by Sommer's point about 'the other 99 percent' of customers and the need for rebranding by SAP as the central message. I believe the company has to demonstrate as many partner solutions as possible as part of a broader platform play. This is not news to SAP but now is the time to make it a reality. Partners though should not stand by and expect SAP to baby them into market. They too have their part to play as business advisors and builders of last mile functionality in niches in which they have expertise.

Disclosure: SAP is a premier partner at the time of writing