IT and Business Insights for SMB Solution Providers

SAP Executive Perspective: The Changing Partner Ecosystem

The global software vendor sees a future where small and midmarket channel partners leverage customer intimacy and vertical industry knowledge to develop solutions based on the SAP platform. By Colleen Frye

“You don’t have to be a big company to have a big vision.”

That’s one of the mantras executives from SAP stressed to SMBs and the channel partners who serve them at the global software provider’s Partner Business Forum last December in New York. The other was that as cloud computing inspires traditional resellers and MSPs to become vertically focused solution developers, SAP is giving them the tools to make that transition more easily.

ChannelPro had a chance to sit down with several SAP executives at the conference and get their take on the cloud opportunity, the changing partner ecosystem, how SAP’s App Center is helping facilitate this change, and what the company says to potential partners who believe SAP is too big for them.

Transformation in the Channel

Luis Murguia, SVP, SAP

“There’s a tremendous transformation happening in our VAR channel these days,” says Luis Murguia, senior vice president of global customer and partner operations for SAP’s SMB-focused, channel-only Business One and Business ByDesign group. As margins on hardware and networking gear have decreased, he explains, VARs are beginning to develop their own intellectual property based on the experience they’ve accumulated selling into and supporting vertical industries. SMBs want solutions that help them drive revenue, give them better control over operations, and deliver better quality services to their customers, says Murguia, and resellers are well positioned to meet that need.

Indeed, VARs today are looking more and more like ISVs, according to Marc Monday (pictured above), VP, North America, and head of channel sales at SAP. “Nobody really thinks of themselves as a VAR anymore, nobody really thinks of themselves as an MSP anymore, nobody really thinks of themselves as a hoster anymore,” he says. They just serve customers, and that increasingly means developing code for them. Based on a forthcoming study from IDC, SAP partners focused on creating and selling their own software in the cloud are projected to grow by 24 percent from 2019 to 2024—the fastest in the vendor’s ecosystem.

The role of the vendor is changing today as well, according to Murguia. “The future of the global software vendors is to become platforms,” he says. “Those that cannot become a platform, there’s a high chance they will be out of business or will be in a significant decline, because becoming a platform where other people build their own businesses allows that business to scale at a much, much faster pace.”

SAP in December offered its partners free testing, demonstration, and development licensing services on the SAP Cloud Platform, an open platform as a service designed to provide a single framework for building and extending SAP solutions. Partners that take advantage of that offer to develop their own intellectual property can sell it as well on the SAP App Center, which launched in May 2017. The online marketplace is designed to simplify the process of building a solution on top of SAP and taking it to market, explains Diane Fanelli, SAP’s senior vice president and general manager of global channels and digital enterprise platform. “So that gives them scale that they never could have necessarily ever had,” she says.

SAP needs the rich domain expertise and innovation partners can bring to customers in this dawning era of “the intelligent enterprise,” Fanelli continues. “This is the best time for the ecosystem to fill in the white space.”

All apps must meet core standards to be certified by SAP. Today there are more than 1,600 apps in the center, and Fanelli hopes to grow that by 10x in the next three years.

Monday says the ability to build extensible services and applications on the SAP platform “is a breakthrough” for the vendor and a valuable opportunity for partners “who can now go and say, ‘OK, I want to go invest in extrapolating from that layer of data some insight, and I want to go improve business processes.’”

About the Author

Colleen Frye's picture

Colleen Frye is ChannelPro's managing editor.

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