Initially announced at the SAP Global Partner Summit Online along with several new offerings for partners, the SAP PartnerEdge Cloud Choice, flex model is a revenue-sharing system that aims to support SAP partners’ transition to cloud sales.
With the SAP PartnerEdge Cloud Choice, flex model — a new revenue-sharing and go-to-market system for partners that breaks the customer life cycle into two parts — the German software giant aims to make it more advantageous for partners to accelerate customer adoption of SAP cloud products beginning in the third quarter of 2021. During the announcement at the virtual event for partners and customers, Karl Fahrbach, Chief Partner Officer at SAP, said that the cloud changes the economic model for partners.
“The way partners were making money before by reselling our software or by doing implementation services, as well, has changed. We needed to adapt our business models as well as economic models to the partners,” he further shared.
Partner engagement in earlier cloud endeavours, according to Fahrbach, is proof that the ecosystem will likely adapt to the new flex model. The SAP PartnerEdge Cloud Choice, profit option, which started in 2016, accounts for half of SAP’s cloud business with partners, Fahrbach added. The particular goal of this program is to get SAP partners up and running in the cloud.
As evidence to Fahrbach’s previous claims that partners are ready for the new flex model and that a “big adoption” is expected in the partner ecosystem, Delaware Consulting has already implemented the flexible, balanced model to help enrich the customer experience and boost its profitability.
Implementing SAP PartnerEdge Cloud Choice, Flex Model
Aymeric Fosset, Associate Partner at Delaware Consulting, described the new flexible system as “simple and powerful.” He further explained:
“Simple, because the commission calculation and price are clearly defined upfront, allowing the partner to be rewarded for the sales cycle management effort right after the contract signature and customer payment. Powerful, because it complements the RISE with SAP offering, allowing increased financial flexibility for the customer.”
Meanwhile, John Scola, Global Vice President for Cloud Channels and Strategy Lead at SAP, said the goal is to offer partners upfront commissions for sales efforts while also raising renewal commission rates. The flex model provides partners a one-time 10{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} total contract value (TCV) commission for managing the sales cycle, as well as a higher incentive for managing the customer life cycle all the way through to renewal.
Moreover, customers may select the best partner for their needs, while partners can concentrate on gaining new accounts and increasing customer engagement. At the same time, partners can better cover initial costs and subsequently engage in teams to build customer relationships using this model.
“We are trying to strike a balance,” Scola stressed.
The SAP PartnerEdge Cloud Choice, flex model is intended to commercially balance the customer life cycle by breaking it into two stages — sales and post-sales. It is available solely for partners on the SAP PartnerEdge, Sell track. In addition, SAP is extending its revenue-share model across all market sectors by introducing a one-time commission for managing the sales cycle in large enterprises, which will open up new potential for partners.
According to Scola, the tech giant is also committing to developing a “white space” where partners can add value without worrying about SAP launching a similar set of services in the future.
