In September SAP plans to roll out a tiered incentive plan that rewards VARs and resellers based on the resources they spend selling SAP's small-business app Business One. SAP's goal for 2005 is to double the 100 VARs selling its SMB product in North AmerSAP America plans to expand its latest, largely successful push into the small and midsized business market by recruiting twice the number of VARs this year as it did last year.
It will do that with a tiered framework of benefits, support programs and financial incentives that it will roll out formally in September. The goals are to double the number of VARs carrying SAP's Business One application, and to make Business One the main product of the 100 VARs currently carrying the product in North America.
"What you will see is a series of co-marketing programs, partner enhanced relationship management, lead-generation programs, all of which will be rolled out later this year," said Michael Sotnick, senior vice president for SMBs (small and midsized businesses) at SAP America.
The program will focus on Business One, SAP's version of an ERP (enterprise resource planning) product it bought when it acquired the Israeli TopManage Financial Solutions in 2002.
It currently markets the product to companies with $10 million to $50 million in revenue; it sells mySAP All-in-One, a trimmed-down version of its large-scale ERP product, to companies up to the $200 million range, Sotnick said.
The VAR marketing program, the details of which Sotnick would not discuss, is designed to provide the VARs who show the greatest commitment to SAP—through their dedication to SAP products over other vendors, the amount of training time and people they assign to SAP products and the number of applications or add-on products they develop, for example—with the greatest level of support.
VARs who are less dedicated to SAP will receive less in the way of co-marketing funds, the generation of good leads and other benefits, Sotnick said. But the goal is to treat all of the resellers well and to help them sell as much software and as high-quality services as possible, Sotnick said.
That's a distinct departure from the history of ERP vendors in the midmarket, according to Joe Lewis, executive vice president of Business Edge Software Services in Dunwoody, Ga., which sells only SAP ERP solutions.
Great Plains Software pioneered the dog-eat-dog method of reseller development, in which it was in no reseller's interest to invest heavily in its business because Great Plains or another vendor could walk in and compete head-to-head at any time, he said.
Click here to read about SAP's plan to offer an RFID roadmap to SMBs.
SAP, on the other hand, steers clear of pitting two solutions providers with the same specialty against each other in the same geographic area when it can. That fosters a sense of cooperation among VARs, which often team up or give each other advice on particular installations, Lewis said.
"That's good because at the reseller level, one goal is to limit or eliminate the amount of competition. That makes the channel more operationally efficient, and that change in the overall cost structure will benefit the customer eventually," he said.
Next Page: A channel-friendly attitude.
Much of the channel-friendly attitude comes from recently hired executives who have spent years in the channel themselves, according to Dan Carr, president of the VAR firm Computer Decisions International in Farmington Hills, Mich. Sotnick, for example, is a former honcho at Veritas Software Corp.
And Donna Troy, who was appointed as senior vice president of its global small and midsize business initiatives in July, spent 25 years in the channel, most recently as executive vice president of worldwide channels at Network Associates Inc.
SAP is also pretty free with the training and support, Carr said.
"I probably have 10 or 12 people that are fully certified, and from one to four weeks of training, and I've never paid a dime for it," Carr said. "They trained us and fed us, tooled us around to our hotels—treated us like customers—and we never paid a dime for it."
Carr did pay travel and hotel, but he got free training in integration, management and software development on Business One, which he has made his flagship product over competing products from Microsoft and Oracle. "I've never had that experience in 24 years in the industry," he said.
Business One is a much more effective, targeted product for small businesses than were the various versions of SAP's enterprise product that it aimed at the midmarket, according to Kathy Quirk, senior researcher at Nucleus Research in Wellesley, Mass.
The company did have some success with that product, but has really taken off in the past two years selling Business One and mySAP All-in-One to different market segments, she said.
Currently, about 30 percent of the company's $9.8 billion in revenue comes from the SMB market, and the company's goal is to push that number closer to 40 percent, she said.
SAP also has continued to update the product, bringing out an updated version last November, and announcing a series of new programs and partnerships to enhance the product.
For example, on Tuesday, SAP America announced a plan to integrate RFID-enabled automatic data collection software from Intermec Technologies Business One. It also announced it would throw its weight behind an RFID (radio-frequency identification) standards effort being run by the Association of Operations Management.
The product itself is also easier to sell than either Microsoft's or Oracle's, largely because of its flexibility, Carr said. End users can easily create new fields in databases and generate data from complex queries into reports that would take hours or days to create in other applications, Carr said.
Sotnick won't commit to that figure, but does say that the company is serious about expanding both its SMB business and its channel.
"The purpose of our upcoming channel framework is to create a more seamless, predictable partner relationship with SAP," he said. "Resellers will know based on their own investment, the number of their precertified salespeople and support people, where they fit as a partner in our structure."
SAP does not intend any radical recruitment of the 29 companies reselling and building solutions on top of mySAP All-in-One, Sotnick said. The company recruited about six new All-in-One VARs last year and will probably do the same in 2005.
"In a solution like All-in-One, there is a substantial learning curve," Sotnick said. "So, we are working with existing partners who are looking to expand."
For Business One, "we will look at the capability of the partners and create a model that will reward them to the level of commitment we see from them, and coordinate all the training and co-marketing and other activity around that," Sotnick said.
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