The last five years has seen the SAP ecosystem transform, sparked by a spate of acquisitions and the company’s changing areas of focus. The Australian and New Zealand partner market hasn’t been immune, with acquisitions becoming a common way for companies to expand their SAP capabilities. Eleanor Reader reports on the evolution and what’s in store for the future.
When Eric Duffaut, president, SAP ecosystem and channels, joined SAP in 2005, it was essentially an ERP company addressing the needs of large companies in a very direct manner and leveraging partners mostly for implementation.
“When a company is like we were years ago – only addressing one primary market – it won’t talk about co-innovation, because it fundamentally owns all development, and it won’t talk about partners as a route-to-market, because it controls go-to-market entirely. So in that sense, the role of partners was limited back then,” he said in an interview with SAP.info in mid-2012.
Looking at SAP in the current day, it’s quite surprising to see just how radically SAP and its ecosystem has shifted away from the company it once was.
The catalyst for this drastic amount of change can be traced back to when SAP’s leaders set their sights on some ambitious goals for 2015.
SAP’S 2015 GOALS
More than €20 billion in revenue.
- One billion people interacting with SAP software.
- Indirect sales (partner revenue) to contribute up to 40 per cent of software revenue.
- A strong position in the five key market categories: Applications, Analytics, Cloud, Mobile, and Database and Technology.
These goals set in motion a sequence of acquisitions, partnerships, product releases and announcements that would forever change the face of the company.
Every decision SAP has been made has been with the purpose of bringing it closer to reaching one of these goals.
The future of the ecosystem is looking as vibrant as ever, says Rhody Burton, sales director, channels, SAP ANZ, with opportunities opening up for new and current partners.
“I think we’re going to see some very interesting partnerships, acquisitions, and even new players joining our ecosystem,” she says.
SAP acquisitions
In support of its growth strategy, SAP began an acquisition spree, buying up companies with specific technologies and capabilities to add to its solution offerings within and across industries.
The largest of these include the acquisitions of BusinessObjects (2007), Sybase (2010), SuccessFactors (2011), Syclo (2012), and Ariba (2012). Along with new solutions and capabilities, each of these acquisitions brought new partners and resellers into the ecosystem, as well offering opportunities in new solution areas for existing partners.
Partners acquiring SAP strength
The announcement of SAP’s strategy sparked huge changes in the partner community. It either increased the value of capabilities partners already had, because SAP was increasing the market size, or created new ways for them to go to market.
According to Duffaut, seven years ago partners contributed to not even 15 per cent of SAP’s software revenue.
“Now, more than 30 per cent of total SAP software revenue comes from partners. So that’s a big, big evolution, because when you look at the past few years, our revenue through and with partners grew even faster than SAP overall and hence acted as an engine of accelerated growth for the company,” he says.
Backtrack about five years ago and SAP started encouraging partners to look at the opportunities that it was creating in the market. Essentially, this was about making partners think differently about how they had done things in the past, and how they could reinvent themselves and create new strategies.
“We want to be really clear with where our partners’ skill-sets are, what areas of the market they’ve got expertise in, and really focus on and hone that,” says Burton.
All this new activity driven by SAP encouraged consolidation in the ANZ market through acquisition. An example is the recent acquisition of Innogence by NTT DATA Business Solutions. With a strong capability around BW and BI, HANA was the next natural focus for the company. Their capability in this area made them an attractive target for NTT DATA, which, instead of waiting six months to develop their own expertise and skill up their sales people, were able to directly acquire a strong partner in this area.
Another example is ASG Group. Traditionally a WA-based Oracle partner, it saw the need to grow on the east coast, and get a foothold in the SAP community. Acquisitions of local SAP-focused companies including Courtland Business Solutions and Progress Pacific have boosted the group’s capabilities in both areas.
According to Burton, this is a trend that will continue to grow in the future.
“We’re already having partners coming to us saying, ‘We want to get into the SAP space, is there anyone that we can acquire?’ I think we’re going to see more acquisitions as companies look for more SAP skills,” she says.
Changing structure of the ecosystem
Up until 18 months ago, there were two distinct partner areas in the SAP ecosystem:
- Service Partners – for example, systems integrators such as Accenture, IBM, Deloitte and Capgemini.
- Channel Partners (resellers) – for example, companies such as NTT DATA Business Solutions, UXC Oxygen and ASG Group.
With the reseller market once classified as ‘under $500 million organisations’, SAP’s sales model prevented resellers from being active in certain areas of the market – some large enterprise and government customers.
This limited what resellers could do, and it also limited the attraction of the larger services partners to become resellers themselves and pursue opportunities in the SME area, because they operated in the large enterprise market.
But with SAP setting the goal of 40 per cent of its revenue to come from indirect channels by 2015, everything started to change. New markets opened up for existing resellers, and large enterprises were opened up to resellers for the first time. A new engagement model for channel partners was put in place, effectively removing the limit on the size of a deal between a channel partner and customer.
This has created a much more vibrant ANZ ecosystem, providing resellers with access to coveted customers. For example, last year NTT DATA closed a resale deal with Super Retail Group, which wouldn’t have been possible in the past.
SAP is also now able to leverage these partners’ domain expertise, such as NTT with BI, BluLeader with CRM and Presence of IT with HR, and increase its reach to its broader customer base.
“We do have limited resources to go out and truly account manage the full breadth of customers that we’ve actually got in our portfolio,” Burton says.
“This really allows our current partners to extend their relationship beyond just a consulting relationship, where they can actually start to take on some of that account management as well and manage those relationships end-to-end.”
Cloud go-to-market
SAP’s cloud strategy created a whole new dynamic around hosting partners, and in the last few years the number has exploded because of new SAP licensing models.
With cloud bringing in a very different paradigm to the old ERP-only days, SAP has had to revisit its licensing options for hosting and cloud partners.
This has provided an interesting alternative for partners who have not had the ability to get into the cloud, or partners who have never really been interested in selling SAP applications because they didn’t have the model to do it.
An example of this is SAP’s recent collaboration with HP to deliver HP as-a-service for SAP HANA, which bundles the SAP HANA software license along with hardware and ongoing management into a complete solution provided in a service model. Clients will pay a monthly subscription fee for the total solution, and, powered by the SAP-certified HP AppSystem for SAP HANA, it runs in in an HP Managed Cloud environment, either as a managed virtual private cloud or a managed private cloud, within a regionalised, enterprise-class HP data centre facility.
Co-innovation
To reach its targeted 2015 goals, SAP has also accelerated co-innovation with its partners – from large SIs to new types of smaller specialised partners.
According to Duffaut, all SAP’s platforms, including database and technology, HANA, mobile and cloud are nothing without applications and industry-specific business content.
“Already over 150 partners are developing mobile applications that are available in the SAP Store. We’ve had amazing co-innovation around the cloud with Amazon and many other partners. The same goes for co-innovation with major hardware vendors like IBM, Cisco, Dell, Fujitsu, and HP that are delivering dedicated appliances for SAP HANA,” he says.
Just in the past couple of months, SAP ANZ has had 10 new partners who they have developed 10 new solutions with using their rapid development solution framework, says Burton.
This co-innovation strategy also includes developing relationships with other technology providers to drive IT outsourcing which takes an OEM approach, embedding SAP solutions into their offerings.
In 2012 Duffaut imagined the day a vendor would embed SAP HANA and sell it in everything they do.
“Think about SAP embedding its technology in many types of applications or hardware solutions that others will sell for us. That gives you scale, that gives you reach, that gives you a real boost in terms of revenue,” he says.
This article was first published in Inside SAP Yearbook 2014 (September 2013).
