SAP this week announced it has appointed Karl Fahrbach to be the company’s first chief partner officer as part of an initiative to engage more deeply with partners that are focused primarily on cloud-based solutions.
In the week and months ahead, Fahrback says SAP plans to extend its existing channel program to reward partners more for renewing cloud services contracts. Historically, the relationship between SAP and partners has focused on sales and implementation. But in the cloud era, most contracts don’t become truly profitable for either the vendor or the partner until year two of the contract. Forthcoming changes to the SAP channel program will be much more focused on the level of customer success, and satisfaction partners deliver around the intellectual property they create on top of SAP cloud platforms, says Fahrback.
Fahrbach after assuming this role becomes the first channel executive at SAP to report directly to the SAP board. Previously, Fahrback had been COO of the SAP Global Partner Operations. The 13-year SAP veteran essentially replaces Rodolpho Cardenuto, the former president of SAP Global Partner Operations.
Fahrback also pledged that SAP intends to treat partners equally versus trying to continue to manage them using classifications such as value-added reseller that have become archaic.
“We don’t want to put partners into boxes anymore,” says Fahrback.
SAP, citing research conducted by SAP, says the partner ecosystem surrounding its platforms is valued at about $100 billion, which SAP expects to see double over the next five years. SAP expects more than 60 percent of that growth to be driven via cloud offerings. Today, however, the preponderance of the SAP partner economy is still tied to on-premises solutions. SAP partners have been quick to sell software-as-a-service (SaaS) applications as complementary offerings to the company’s core ERP software. But efforts to shift SAP customers towards an instance of SAP ERP software running in the cloud that is managed by SAP on their behalf remain a work in progress. SAP earlier this year revealed for the full year new cloud bookings were €1.81 billion, up 25 percent. Cloud subscriptions and support backlog increased 30 percent, reaching €10 billion at year-end. But overall, SAP software revenue decreased 5 percent year over year to €4.65 billion.
As the level of competition SAP faces inside and out of the channel continues to intensify, it’s clear much of the battle for control over the future of SAP will be won or lost by the number of SAP channel partners that develop cloud expertise.
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