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While Oracle made
it clear
last week that it is placing its bets on a much more
direct-sales go-to-market strategy in the wake of its acquisition of Sun
Microsystems,  rival SAP is moving in
quite the opposite direction. Long-known for its enterprise-focused
direct-sales machine, SAP over the last
couple of years has been ratcheting up its investment in the indirect channel
and is touting 2010 as the year to open up the available market opportunity to
even more partners.

In an interview with Channel Insider, Pat Hume, senior vice president of SAP’s
Global SME Channel, detailed a number of initiatives and changes to SAP’s
channel partner approach, most notably the company’s goal to have 100 percent
of new SME business go through the channel. In 2008, 32 percent of SAP’s
SME revenue flowed through partners; the percentage for 2009 is expected to
have climbed to 52 percent, Hume said.

Previously, SAP defined the SME market as
comprising deals worth $300 million and below, and confined partners to that
threshold. However, as part of the channel changes being made this year, SAP
has raised the SME ceiling to deals of $500 million and below. That’s the
universe the company wants to be handled 100 percent direct, Hume said. The
only exceptions will be in cases where partner coverage is lacking, she said.
For example, if the deal called for a partner with pharmaceutical industry
expertise at a specific geographic location and that partner just didn’t exist,
SAP would take the business direct.

These changes reflect an ongoing mindset shift inside the company to
recognize the necessity of a robust channel, she said.

“When I joined [SAP two years ago], I
said there was a lot of work to do to really get SAP
to embrace a commitment to channel,” she said. “Now when we tell partners about
going 100 percent direct, we resolve conflict and demonstrate through real
proof points, we got the message across. Our go-to-market makes sense, and the
fact that SAP corporate recognizes the value
of multichannel is highly indicative of their trust in our partner community.”

From an investment standpoint, SAP
recently hired channel executive veteran Kevin Gilroy to head up its North
American channel organization. Gilroy,
who among other recent roles was a longtime channel chief at HP, will be tapped
with several key initiatives, according to Hume, among them recruitment of new
partners in industries and subregions that need coverage. The goal is not to
build a high-volume channel, however, but rather one that consists of a smaller
number of value-added partners, she stressed. In order to cultivate these
partners, Hume has instructed Gilroy
to raise the bar on channel management activities.

“We want to make sure we are giving them the support they need to stay
loyal,” she said.

Additionally, Hume said she has asked Gilroy
to spend some time focusing on the $100 million and below market, where SAP
sees untapped customer opportunity. Part of succeeding there will be to nurture
a subset of partners that are more transactional in nature, she said, which is
not the typical SAP partner today that is
largely consultative and focused on system integration.

Other moves in 2010 include moving SAP’s
volume distribution business under Hume’s purview. Her group will now be
managing relationships with the broadline distributors, including Tech Data and
Ingram Micro, as well as the DMRs that largely handle fulfillment of SAP’s
Crystal analytics products picked
up in the $6.8 billion acquisition of Business Objects in 2007.

From a programmatic standpoint, SAP is
simplifying the means in which partners earn value points and access MDF
dollars, she said. These changes are a result of feedback from partners.

“We are listening,” she said.