Late last year, ASUG had the opportunity to catch up with Karl Fahrbach, chief partner officer at SAP. Over the course of our conversation, Karl discussed his predictions for the SAP partner ecosystem, some of the largest innovations in this space, and what is exciting him most about his work that partners.
ASUG: What are your thoughts on the big innovations and events that happened in the SAP partner ecosystem last year?
Karl Fahrbach: To put it simply, the only constant has been change. As I always say, the ecosystem at SAP is experience an ongoing transformation. Particularly since last year, the ecosystem has been at the very top of the SAP agenda. If you look at our CEO Christian Klein’s priorities, the partner ecosystem is one of them. We are convinced, from an SAP perspective, that a strong ecosystem is the only way we can deliver success to our customers, and to ensure that our customers stay with us for the entire lifecycle.
Being at the very top of the SAP strategy has changed the game. We hear about ecosystem and partners every day at the executive board level. They all have the ecosystem as one of the key growth and innovation drivers for SAP. We now look at everything we do through a partner-centric lens.
Another significant trend last year was the move to the cloud. In early 2021, SAP launched an initiative called RISE with SAP. For those not familiar with it, RISE with SAP is focused on helping to turn companies into intelligent enterprises at the pace they need. It’s been very successful from a partner perspective. It was a little bit of learning process at the beginning and SAP has been working with its partners, listening to them, and making adjustments to ensure that RISE with SAP meets the partners’ expectations. The partner ecosystem has a huge role to play in pushing RISE with SAP.
What we want to do with RISE with SAP is enable the transformation of our customers’ business. If you look at the SAP ecosystem, the only ones that can drive this transformation with services are our partners. Our partners drive 90% of all the projects, implementations, and the adoption services that we run for our customers.
ASUG: Over the past two years, how has COVID-19 affected and altered the way that the partner community supports SAP customers?
Karl Fahrbach: This crisis had made companies—big and small—realize how important it is to move towards digitalization, while also understanding the importance of transforming the way they were doing things and were running their day-to-day operations. If you look at the enabler for digital transformation, it is the cloud and the ecosystem. Many of the partners that I talked to had a great 2021. I think our partners have been able to adapt to this situation. It was a shock at the beginning for everyone, but I think the need for digitalization has accelerated business for many of our partners.
ASUG: Let's move now to this year. As you look at 2022, what is exciting you the most about the SAP partner community?
Karl Fahrbach: First is still the cloud opportunity and the transformation opportunity. I see a huge need for digitalization and transformation, and our partner ecosystem plays a big role in meeting those needs. We need to lay the groundwork together because if you look at the number of customers that we have, the demand for digitalization is there. We need capacity and more people that will be running those projects in our ecosystem. I think our partners also need to evolve and transform to be ready to serve the huge demand that we have in the market.
Second is probably one of the biggest opportunities in 2022: the area of partner innovation. Looking at our portfolio, we realized that we can increase time-to-value for customers through partner-built applications that are relevant to their business.
This year, you’re going to see a lot of moves from our side in the ecosystem area where we're partnering with other companies that have a product that complements our portfolio. We're going to make sure that the innovations that the ecosystem is bringing can be built on or integrate with the SAP Business Technology Platform (SAP BTP). We’re also going to make sure that we can monetize it together and help partners that are going to market and creating opportunities.
ASUG: I attended SAP TechEd at the end of last year and was excited to hear a lot about the low-code, no-code capabilities that SAP announced. I'd love to know a little bit about how you hope that these expanded low-code, no-code options will spur the innovation capabilities of partners in 2022?
Karl: If we have our ecosystem embracing low-code, no-code capability, I think the speed to innovation on top of SAP BTP will be much quicker. This is because the time to value and the time to create IP will be much faster than before. Therefore we need our partners to embrace that new capability. We want to ensure that they run shorter circles, in terms of building an application and taking it to market. Another benefit is that this helps to attract new talent. We are always looking at new ways of attracting and developing talent to join the SAP ecosystem.
ASUG: How do you predict partners will continue to innovate in the coming year?
Karl Fahrbach: We have typically classified most of our partners into types: value-added resellers and system integrators, and independent software vendors (ISV) are a few notable examples. I think those partner types will blur because all partners will embrace innovation. A lot of the traditional ISVs have a business based on selling our licenses in addition to implementation services. All these partners are building IP on top of SAP BTP or are exploring that idea and investing in that option. That said, my number one prediction for 2022 — and in the coming years — for our partner ecosystem is that all partners will become software factories. If our partners want to be successful and create value for the customers, they all need to move to develop software and IP. That's where the value for the customers will be.
ASUG: That's a great lead-in to my next question. How do you predict partners’ economic models will continue to change throughout the next year?
Karl Fahrbach: What you will see in 2022 is that from an economic model perspective, we could go more to a pay-as-you-go model, which you can see already in the consumer industry. The more you consume, the more you get and the better the price you get for it. I think we're going towards that model, especially when it comes to SAP BTP. We announced that we're moving as well to a consumption-based monetization model for both customers and partners. Additionally, we are going to make access to our technology — like the SAP BTP — simpler and more affordable.
ASUG: Why do you think we're going to see more emphasis on a consumption-based economic model? Is this a demand that you're already seeing in both the partner and the customer ecosystems?
Karl Fahrbach: We see it from a customer perspective. They're saying, “I want to pay for what I use.” That model give the customer flexibility while also being financially and economically attractive to customers. When we looked at it from a partner perspective, it was the same. Our partners were telling us “If I have access to the technology in a pay-as-you-go model, I will not have to invest so much up front.” They will be quicker, in terms of getting access to SAP BTP, building innovation, monetizing that innovation, and then gaining adoption. I think it will enable us to lower the barrier for partners to access our technology, so we'll have more partners building and accessing SAP BTP.
ASUG: How do you hope the partner ecosystem will continue to evolve and innovate in 2022?
Karl Fahrbach: I foresee partners participating much more across the entire customer lifecycle. If you look back just three or four years ago, the basic role of the partners in the SAP ecosystem was selling and implementing. You could be a selling partner, or you could be a services partner. What I predict for this year, in terms of the partner business, is that you'll see partners involved in every step of the lifecycle of the customers. To maximize value and keep customers for life, we need partners involved in creating that value.
I also see partners adapting their offerings to deliver services and applications that meet the specific needs of our customers. Partners will focus both on adoption and consumption, not just implementing and then taking off. It's staying on top of the customers’ needs and making sure they drive adoption and consumption. To do that we need a refresh of the services that partners are offering.