SAP part­ner orga­ni­za­tions and cus­tomers depend on each oth­er. Much of what SAP sells would be impos­si­ble for cus­tomers to imple­ment, run, or man­age with­out help from the expe­ri­enced part­ners who take on these responsibilities. 

So, who qual­i­fies as an SAP part­ner orga­ni­za­tion? Tra­di­tion­al­ly these com­pa­nies have fall­en into three dis­tinct cat­e­gories: the sys­tem inte­gra­tors (SIs) that help you imple­ment your soft­ware, the val­ue-added resellers who both sell and imple­ment your soft­ware, and the part­ners who offer their own soft­ware and ser­vices based on the intel­lec­tu­al prop­er­ty they have developed. 

The Next Gen­er­a­tion of SAP Partners

Today, these three types of part­ners are more like­ly to cross over into each other’s lanes as busi­ness needs evolve for SAP cus­tomers. Those part­ners who typ­i­cal­ly have not focused on cre­at­ing their own intel­lec­tu­al prop­er­ty, for exam­ple, are now doing so to dif­fer­en­ti­ate them­selves in the mar­ket. And from the cus­tomer side, the demand for spe­cial­ized indus­try-focused or work­flow-focused solu­tions is increas­ing, dri­ving the devel­op­ment of new prod­ucts to sat­is­fy those appetites.

SAP refers to the evo­lu­tion of this group into ​“next-gen­er­a­tion part­ners” and has built its own part­ner strat­e­gy to help them along the way as they become more mul­ti­fac­eted. This approach was a big top­ic at the 2020 SAP Glob­al Part­ner Sum­mit—nor­mal­ly held the week of SAP­PHIRE NOW and this year pre­sent­ed in a vir­tu­al event. Dur­ing the sum­mit, we had the oppor­tu­ni­ty to catch up with SAP’s Chief Part­ner Offi­cer Karl Fahrbach to hear more about the lat­est enhance­ments his team is mak­ing to help both SAP part­ners and cus­tomers succeed. 

Ann Marie: Karl, could you tell us a bit about the part­ner busi­ness at SAP? 

Karl: With­in our part­ner busi­ness, we have two philoso­phies. The first one is mak­ing sure that we have good busi­ness out­comes and results. The oth­er phi­los­o­phy is trans­form­ing the SAP part­ner busi­ness to a next-gen­er­a­tion approach. 

Ann Marie: In your opin­ion, how will part­ners need to evolve in the near term to bet­ter sup­port SAP cus­tomers? Obvi­ous­ly, we’ve all had to adapt very quick­ly because of the COVID-19 pandemic. 

Karl: Next-gen­er­a­tion part­ner­ing is an ini­tia­tive that we launched a year ago and that has become even more rel­e­vant these days. If I look at where we set the bar and the direc­tion we took at the begin­ning of last year, our pri­or­i­ties are still the same. 

First, in an envi­ron­ment like this, we know we need to invest in inno­va­tion. We need to make sure that our part­ners take inno­va­tion very seri­ous­ly. That’s where the growth and mar­gins will come from. 

Our role is to make inno­va­tion easy for our part­ners, right? This is an area where we’re real­ly push­ing our part­ners very hard to make sure that they under­stand it is impor­tant. It’s the way they will be able to sur­vive and be suc­cess­ful in the future. And we under­stand that we need to make it eas­i­er for them to compete. 

The sec­ond pri­or­i­ty is we need to make sure that our part­ners expe­ri­ence good eco­nom­ics when it comes to work­ing with SAP. It was evi­dent when the COVID-19 cri­sis hit that a need arose for a bet­ter eco­nom­ic mod­el. Some of our part­ners were suf­fer­ing from a cash-flow per­spec­tive, some didn’t have financ­ing, some saw their mar­gins going down. Under the pil­lar of our next-gen­er­a­tion part­ner­ing ini­tia­tives, we are con­stant­ly review­ing our abil­i­ty to deliv­er the right eco­nom­ics for our partners. 

And the third pri­or­i­ty is the expe­ri­ence. We are work­ing very hard to make sure that our part­ners have the best expe­ri­ence with SAP. I think it was rel­e­vant before, but now in this new sit­u­a­tion, being empa­thet­ic and lis­ten­ing to our part­ners and our cus­tomers is key to hav­ing a good impact. 

And then if I look at our part­ners, what is it that they need to change? In the short term, it’s to lis­ten to their cus­tomers. They need to under­stand what has changed from their cus­tomers’ per­spec­tives. And they need to adapt by adding things like new offer­ings. What their cus­tomers were buy­ing in the past — two months ago, three months ago — may not be as val­ued any­more. Their needs have changed. They have dif­fer­ent prob­lems, so our part­ners need to adjust their offer­ings to help cus­tomers solve those problems. 

Ann Marie: What changes do part­ners need to make for the long term? 

Karl: If I look at the long term, I believe that our part­ners need to move from a focus on trans­ac­tions to look at the entire life cycle of the rela­tion­ship with their cus­tomers. That’s going to mean exam­in­ing whether their cus­tomers are suc­cess­ful, ver­sus how much busi­ness part­ners are man­ag­ing by trans­ac­tion. That’s what real­ly dri­ves rev­enues, upselling, and cross-sell­ing. The oth­er ele­ment is, as I men­tioned before, inno­va­tion. Part­ners need to invest in inno­vat­ing and that will make them even more rel­e­vant to their customers. 

Ann Marie: ASUG has done some research on how the SAP S/4HANA cer­ti­fi­ca­tion process affects both part­ners and cus­tomers. We found that cer­ti­fi­ca­tion isn’t as seam­less as either group would like. Have you made any enhance­ments to the SAP cer­ti­fi­ca­tion process in the past year to help cus­tomers inno­vate and part­ners be ready to deliv­er what’s next from SAP? 

Karl: I think we need to make sure that our part­ners have a bet­ter cer­ti­fi­ca­tion process. In the end, what we want to dri­ve is qual­i­ty for our end cus­tomers through the partners. 

We recent­ly launched the part­ner deliv­ery qual­i­ty frame­work, which gives part­ners the tools to make sure that their ser­vices and com­mu­ni­ca­tions are much more seam­less for their cus­tomers than they are today. The frame­work includes three main pieces. The first piece looks at the qual­i­ty of the projects, mak­ing sure that the qual­i­ty of each project is in line with the stan­dards for ver­i­fied part­ners. The sec­ond piece is, if you have a cer­ti­fi­ca­tion, we will make sure that our part­ners have more cer­ti­fied con­sul­tants. That will dri­ve the qual­i­ty of the deliv­ery arm for our partners. 

And then the third piece is that we, from an SAP per­spec­tive, don’t ded­i­cate our resources only to the busi­ness side where we’re ask­ing our part­ners: How much are you sell­ing? What’s going to be the plan for this quar­ter? What does your pipeline look like? We want to make sure we give them enough guid­ance and sup­port to help them make their ser­vices better. 

Obvi­ous­ly, we have a lot of part­ners with cer­ti­fied add-ons. This is some­thing we are look­ing at very care­ful­ly to make sure that we are pro­vid­ing enough ser­vices to sup­port. We are offer­ing free access to the SAP S/4HANA sand­box before the offi­cial release so cus­tomers can select the add-ons they want to play with. We have a process that involves check­ing all the add-ons to be sure they are cer­ti­fied for SAP S/4HANA.

Ann Marie: I think that will help quite a bit. It’s hard for part­ners because there are so many dif­fer­ent releas­es that cus­tomers are using that it’s chal­leng­ing for them to know exact­ly where to focus their cer­ti­fi­ca­tion efforts. And it’s chal­leng­ing for the cus­tomers to know which of their inte­gra­tions will be cer­ti­fied for those next releas­es when they decide to upgrade. As we see more cus­tomers mov­ing to SAP S/4HANA, it’s good to know that SAP has its eye on this issue. 

Karl: We have a ser­vice that we offer to part­ners through an annu­al sub­scrip­tion to guide them through the com­plex­i­ty of all the dif­fer­ent soft­ware releas­es and what they need to do to recer­ti­fy their add-ons on an ongo­ing basis. We actu­al­ly dri­ve this process with them through that ser­vice so part­ners will not be lost and forced to fig­ure out for them­selves when and what they need to recertify.

Ann Marie: Switch­ing gears a bit, what’s the ben­e­fit to part­ners in par­tic­i­pat­ing in the SAP App Cen­ter? And what’s the ben­e­fit to customers?

Karl: For the part­ners using the SAP App Cen­ter, the ben­e­fit is very clear. We recent­ly announced our soft­ware Part­ner Solu­tion Pro­gres­sion. What are the mod­els and what are the pro­grams for part­ners to inno­vate with SAP and how do we mon­e­tize? The back­bone of every­thing is the SAP App Cen­ter. It all starts there. Every part­ner that has devel­oped intel­lec­tu­al prop­er­ty and wants to mon­e­tize it should pub­lish its appli­ca­tions in the SAP App Center. 

The SAP App Cen­ter is the place to go for cus­tomers, as well as inter­nal­ly for our account exec­u­tives to build their bills of mate­ri­als when they’re talk­ing to cus­tomers. We have seen a lot of research that is telling us that cus­tomers want, on aver­age, to buy a vendor’s solu­tion plus two or three part­ner solu­tions on top. That process will be facil­i­tat­ed by the SAP App Center. 

If part­ners want to mon­e­tize their intel­lec­tu­al prop­er­ty, have access to our cus­tomer base, and reach our account exec­u­tives, the SAP App Cen­ter is the place to be. It will put cus­tomers clos­er to solu­tions, part­ners clos­er to cus­tomers, and con­nect part­ners with our account exec­u­tives. The SAP App Cen­ter is the mar­ket­place where every­thing will converge.

Ann Marie: Why is SAP’s cus­tomer first ini­tia­tive so entwined with the work that you’re doing with partners?

Karl: At the begin­ning of 2020, we cre­at­ed a new board area called Cus­tomer Suc­cess. That’s a big change for SAP because we are mov­ing away from just mea­sur­ing our cus­tomer inter­ac­tions in sales, num­ber of orders, rev­enue, and so on. We are redefin­ing all our KPIs around mak­ing our cus­tomers suc­cess­ful. We now talk about adop­tion, we talk about expan­sion, and we talk about con­sump­tion. Those new KPIs will be dri­ven by this new board area. 

We have tak­en all the cus­tomer-cen­tric roles — from mar­ket­ing, to sales, pre-sales, our ser­vice orga­ni­za­tion — and we have moved them to that new area. We have a Cus­tomer First orga­ni­za­tion that dri­ves renewals, as well. As we step away from just mea­sur­ing the suc­cess of our peo­ple by sales alone, we are now con­sid­er­ing all of the fac­tors I men­tioned here part of cus­tomer success. 

Now my role and the part­ner orga­ni­za­tion are part of our Cus­tomer Suc­cess board area. This is because we know that to make our cus­tomers suc­cess­ful, we need to make our part­ners suc­cess­ful. Our part­ners will dri­ve cus­tomer success. 

Ann Marie: We’ve been fol­low­ing all the dif­fer­ent cloud ini­tia­tives going on at SAP, such as Project Embrace, for exam­ple. I know that there were some announce­ments at the 2020 SAP Glob­al Part­ner Sum­mit about the cloud. How are you help­ing SAP cus­tomers team up with var­i­ous part­ners to devel­op and man­age their cloud strategies?

Karl: We give our cus­tomers choice. If you look at the typ­i­cal solu­tions we offer by mar­ket seg­ment, you’ll see that we’ve always had an on-premise option and now we have a cloud solu­tion for each of them. Our port­fo­lio is very rich in terms of cloud offer­ings when you look from a Line of Busi­ness per­spec­tive to deliv­er­ing the intel­li­gent enter­prise through your ERP system. 

We have the right offer­ings when it comes to con­sump­tion. Our part­ners offer pub­lic and pri­vate cloud ser­vices. We have a part­ner-man­aged cloud offer­ing where our part­ners deliv­er the ser­vice on our behalf, com­bined with oth­er ser­vices. And we have the hyper­scaler options. This allows our part­ners access to a very com­pet­i­tive and unique port­fo­lio of cloud solutions.

When I look at the pro­gram that we have for our part­ners to mon­e­tize cloud engage­ments with our cus­tomers, we have been mak­ing a lot of progress. We offer part­ners a choice of mod­els, and our part­ners are able to resell our cloud solu­tions, which is very rare in the indus­try. For exam­ple, we have a rev­enue-share mod­el that we intro­duced a cou­ple of years ago, which is called Cloud Choice Prof­it. This mod­el allows part­ners to close SAP deals on SAP paper. 

Ann Marie: I know that there were some announce­ments at the 2020 SAP Glob­al Part­ner Sum­mit about mak­ing sure that SAP solu­tions are ready to sup­port the needs of var­i­ous indus­tries for cus­tomers. What can you tell us about the devel­op­ments in that area, par­tic­u­lar­ly relat­ed to how SAP is prepar­ing part­ners to help deliv­er those indus­try solutions?

Karl: If you look at the dif­fer­ent indus­try solu­tions, this is some­thing that we will be invest­ing in a lot at SAP. We have a very pow­er­ful track record of being suc­cess­ful in indus­tries on-premise and we want to build the same track record for the cloud. As for the role of the part­ners there, we have real­ized if we want to be quick, if we want to be fast, if we want to deliv­er qual­i­ty solu­tions, we can­not do every­thing on our own. 

To fill in those white spaces in our port­fo­lio by indus­tries, we will need to work with part­ners. For some indus­tries, we will work with part­ners to extend SAP indus­try solu­tions. For some indus­tries, we will work with our part­ners to divide and con­quer. SAP will cov­er some spe­cif­ic pieces of the indus­try and our part­ners will cov­er the rest. And some indus­tries will be com­plete­ly cov­ered by part­ners. If we want to dou­ble down on an indus­try, we see part­ners play­ing a fun­da­men­tal role in help­ing us reach these key markets. 

Ann Marie: That makes a lot of sense. If you’re in a spe­cif­ic indus­try and you want to inno­vate, you need to work with part­ners that can cus­tomize solu­tions to sup­port your spe­cial­ized busi­ness process­es. Final­ly, what are the biggest take­aways from the lat­est part­ner announce­ments that you would share with our cus­tomer and part­ner mem­bers at ASUG?

Karl: There are three rel­e­vant take­aways. The first take­away is that SAP has put our part­ners at the very cen­ter because SAP believes to make our cus­tomers suc­cess­ful, all part­ners play a key role. Again, we’re not look­ing only at sales. We’re not look­ing only at imple­men­ta­tions. We see the part­ners as strate­gic as they sup­port the entire life cycle of the customer. 

The sec­ond take­away is our empha­sis on qual­i­ty. We need to make sure that our part­ners are equipped to deliv­er qual­i­ty to our cus­tomers. This is why we are work­ing on the part­ner deliv­ery qual­i­ty frame­work that I men­tioned before, because we believe that we need to help our part­ners deliv­er high stan­dards of qual­i­ty. This is because the cus­tomer expe­ri­ence starts with imple­men­ta­tions, and 90% of SAP imple­men­ta­tions are done by part­ners. Part­ners play a key role in mak­ing imple­men­ta­tions suc­cess­ful. And that suc­cess is dri­ven by quality. 

Then the third take­away is inno­va­tion. Cus­tomers will be as suc­cess­ful as they are able to absorb and lever­age inno­va­tion to trans­form their busi­ness­es. That inno­va­tion will come through our part­ners. So, we are equip­ping our part­ners to inno­vate with SAP solu­tions and to extend our port­fo­lio. In the end, that will ben­e­fit our customers. 

Part­ners are more strate­gic to our com­pa­ny than ever. We want our part­ners to deliv­er qual­i­ty so they can make our cus­tomers suc­cess­ful. To make our cus­tomers suc­cess­ful, inno­va­tion is key. And the key dri­ver for inno­va­tion at SAP will be our part­ner ecosystem. 

Ann Marie: One final fol­low-up. Though they are not the norm, there are sto­ries you hear about part­ners that have not deliv­ered as promised to SAP cus­tomers. I know SAP’s part­ner deliv­ery qual­i­ty frame­work is designed to keep those part­ners out. But what are you doing with your orga­ni­za­tion to help pro­tect cus­tomers from hir­ing a part­ner that isn’t up to the high­est standards? 

Karl: This is a very good ques­tion. We want to pro­tect cus­tomers from hav­ing a bad expe­ri­ence with part­ners, and this is why we iden­ti­fied the qual­i­ty stan­dards for projects that are part of our new frame­work. We’re going to be check­ing these projects, mon­i­tor­ing them in real time to make sure there are no esca­la­tions and that we can coach the part­ner to make the project a suc­cess. We are invest­ing in the qual­i­ty of our part­ner capac­i­ty and mak­ing sure they are prop­er­ly cer­ti­fied. And we are invest­ing in resources that will help our part­ners main­tain a well-suit­ed ser­vices arm. 

If you look at part­ner pro­grams of the past, they were most­ly based on sales. The more you sell, the more you resell — the bet­ter part­ner you are. And you go up the chain from bronze to plat­inum, or what­ev­er des­ig­na­tion exists. 

We’re using our part­ner deliv­ery qual­i­ty frame­work to look at our part­ners in a dif­fer­ent way. We want our part­ners to be reward­ed not only by quan­ti­ty of projects they com­plete, but their qual­i­ty as well. The frame­work we have built will dri­ve the rewards for part­ners. And, of course, this will come along with con­se­quence man­age­ment. The more you invest in qual­i­ty and the bet­ter projects you exe­cute, you will move up in the frame­work. But you will move down or out if you fail and your project qual­i­ty is not good enough. 

Ann Marie: I real­ly appre­ci­ate you catch­ing us up on the lat­est ini­tia­tives SAP has in place to sup­port both cus­tomers and part­ners. Thank you so much for your time. 

Join us at one of our ASUG Exec­u­tive Exchange events to net­work with oth­er exec­u­tives look­ing to get more val­ue from their SAP systems.