SAP is trying to drive a digital transformation of the way enterprise software is sold via the channel in the age of the cloud that spans everything from the way applications and services are offered online to how solution providers engage line of business (LOB) executives on social media platforms such as LinkedIn.
As part of an effort to focus the sales efforts of channel partners on LOB executives SAP is also now making available applications developed by partners available via the AppCenter online store found on SAP.com, says John Scola, vice president of cloud channels and strategy for SAP. The only caveat is those cloud applications need to be accompanied by services contracts that specify a fixed scope of engagement versus an hourly rate, adds Scola.
SAP is also now setting up indirect sales quotas for its sales teams to drive adoption of those applications in addition to providing partners with subscriptions to LinkedIn Navigator to drive sales using digital marketing tools provided by SAP, says Scola. To facilitate those efforts SAP is also starting to employ its inside sales teams to help drive business to those partners, says Scola.
All told, Scola says SAP now has 17,000 partners, over which 3,600 are now certified to sell various cloud services spanning everything from ERP to travel management applications. Over 600 of those partners have been brought on board in the last 24 months, adds Scola. Those partners are a mix of organizations with business models borne of the cloud as well as existing resellers making the transition to the cloud. That latter category tends to need more handholding in terms of both absorbing the economic impact of transitioning to a recurring revenue model and shifting their sales efforts away from IT to focus on LOB executives, says Scola.
“A lot of partners are still struggling with cash flow,” says Scola.
SAP itself is already far down that path. SAP has now passed the point where the sales run rate for cloud services now exceeds on-premises revenue run rates, says Scola. Of course, the volume of on-premises sales still dominates the SAP balance sheet. SAP partners collectively are generating over $1 billion in annual revenue for SAP, says Scola.
It may take a while for the channel as a whole to make a complete transition to the cloud. But as evidenced by SAP that transition is clearly more a matter of when than if.
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