SAP Heads To the Channel

Of the big three business software players, SAP has the least experience in the traditional channel. But this year, it unveiled its first partner program, PartnerEdge. SAP CEO Henning Kagermann sat down with VARBusiness to talk about the company's channel efforts, future challenges and bid for the midmarket.

VB: What are SAP's plans for going after SMBs?

Kagermann: We are in the business of building for a long time. It started when SAP decided to go into the midmarket many, many years ago. When we found out we needed microverticals to be successful, we came out with the first product for the space called mySAP All-in-One, which had industry flavor but was too complex for the midmarket. We had a CPG solution to sell to the Nestlés and Unilevers of the world. But if you go to a small, local brewery or dairy, the processes are not exactly the same. So, we decided that ISVs could put a template on top that had our "dairy" solution. We have hundreds of those already. Later, we acquired Business One, which is sold completely indirect. Today, we feel we have to extend this. We want to do more business in this space and get new types of partners. And, therefore, it was necessary to bring a very seasoned team [of channel execs] to SAP--people who have experience.

VB: What are your goals for the SMB business, in particular?

Kagermann: We have 30 percent of our revenue coming from the midmarket today. It's channel and direct sales...the midmarket for us are companies below $1 billion. This is a segment we are going after with different products, and because the midmarket is so large, I think you can go with direct and indirect sales. What we want to do is strengthen the indirect channel. The goal is to have in 2010 a ratio of 60/40, with 40 percent of revenue coming from the midmarket. We expect half our midmarket business to go through the channel.

VB: How are you partnering with ISVs?

Kagermann: In our case, the ISVs start building their own software on top of 70 to 80 percent of an application already supplied by SAP. So it's much faster for them to bring innovative stuff to the market. Why should they rebuild a general ledger or order management? There are more innovative solutions on top of the basic software that clients want.

VB: What's your biggest challenge looking ahead?

Kagermann: Execution. So far, we have done well from my CEO point of view.