SAP Looks to the Channel to Expand Its Cloud ReachBy Michael Vizard | Print
SAP aims to drive growth outside traditional enterprise IT accounts. The channel will play a key role in helping the company reach that goal.
At the SAP Global Partner Summit 2016 conference, SAP promised to create a dedicated channel program around its cloud applications and services as part of an effort to foster the emergence of a much broader SAP ecosystem.
While details of the cloud channel program are still being worked out, Rodolpho Cardenuto, president, Global Channels & General Business for SAP, said the program will be designed to drive further adoption of HANA S/4, Ariba, SuccessFactors and Hybris cloud services in the small- and midsize-business (SMB) segment.
"Today, the channel accounts for about 13 percent of SAP revenues," said Cardenuto. "Over the next couple years, we want to grow that number to over 26 percent."
To help achieve that goal, SAP has appointed Scott Jones to be the head of general business for SAP North America. Jones will assume responsibility for managing the channel in North America. At the same time, SAP also revealed that is has created a SAP HANA Value Assurance program under which solution providers are now being required to have SAP validate their HANA implementations.
Cardenuto said the ultimate goal is to help SAP partners create a more predictable recurring revenue model around cloud applications and services. The challenge is that, in shifting to the cloud, the product and service revenue of a partner can drop by about a third. As such, solution providers in the age of the cloud need to sell more products and services, especially in SMB accounts where SAP doesn't have as much of a presence as it does in the enterprise.
In fact, SAP signed on 1,500 new customers last quarter on top of another 7,700 new customers last year, Cardenuto said.
As part of that effort, SAP has sharply changed its approach to the cloud. This time last year, SAP was focused on pushing the adoption of SAP applications that it managed in the cloud. This year, SAP is not only touting a new alliance with Microsoft under which HANA applications will be hosted on the Azure cloud, it is also encouraging customers to deploy HANA applications across a broad range of third-party cloud services.
Akhilesh Tiwari, global head of the SAP practice for Tata Consulting Service (TCS), said it was only a matter of time before SAP came to rely more on partners to sell cloud services. "We always had the view that is the way things would pan out," said Tiwari. "A lot of customers are risk-adverse when it comes to putting all their eggs in one basket."
To facilitate that process, SAP is investing heavily in a Hana Cloud Platform (HCP) that combines HANA with the open-source platform-as-a-service (PaaS) environment to wrap a layer of open APIs around a back-end HANA database and an implementation of Apache Spark dubbed Vora.
"SAP is concerned that people will perceive Hana to be a closed platform," said Carl Olofson, an industry analyst with IDC. "For that reason, they are making sure the APIs surrounding it are as open as possible.
In addition, SAP is also now more aggressively pursuing alliances with vendors, such as Apple, which earlier this month agreed to work with SAP to create HANA applications that will run natively on Apple iOS devices, and Dell, which this week became the first OEM to bundle a SAP HANA, Edge Edition offering that SAP says it will only make available via channel partners.
Put it altogether and it is clear SAP is looking to broaden its reach to drive growth outside traditional enterprise IT accounts. Achieving that goal, however, is not going to be possible without a lot of help from the channel.
Michael Vizard has been covering IT issues in the enterprise for more than 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.