Partners have been central to the success of SAP since it was founded in 1972, and the company has become increasingly focused on its partner ecosystem as it emphasizes cloud industries and seeks to offer best-in-class solutions to drive customer success. Today, as enterprises shift to cloud ERP systems, continuously transform their businesses, and embrace technologies such as artificial intelligence (AI), SAP’s partner ecosystem has an important role to play.
ASUG recently spoke with Karl Fahrbach, Chief Partner Officer at SAP, to learn how SAP will leverage its partner ecosystem to become even more “partner-centric and partner-driven,” in his words.
Fahrbach leads SAP’s channel organization, supporting customers through digital transformation and transition to the cloud. A 19-year SAP veteran, he started his career as part of the team that developed the company's flagship SAP PartnerEdge program and later served as global head of channels and chief operating officer for the company’s Global Partner Organization before being named chief partner officer.
This interview has been edited and condensed.
Question: Let’s start with the strategic role partnerships play at SAP. How did this partner ecosystem form, and how do partners contribute to SAP’s success?
Answer: Partnering has always been at the heart of SAP. Partnering started at the very beginning, and we have 51 years of history. Our founders came from IBM, which meant we were already in partnership with IBM, and through that partnership, SAP was able to achieve scale and reach more customers. But if you look at the evolution and back to the on-premises world, partnering was all about selling; it was about partners taking our software and reselling it to other companies, primarily in the mid-market space. We also needed partners to implement our solutions.
Today, I believe that about 80%—maybe a little more—of all our new customers yearly come from partners. If you look at project implementations, 90% are done by partners. We have more than 25,000 partners (developing & innovating, advising & integrating, and selling partners)—a rich, lively, and diverse ecosystem.
As we move to the cloud, our main KPI is customer success. Partners need to be embedded in everything we do. When you look at the SAP product portfolio, we cannot develop everything on our own. That’s why, as we concentrate on our core business and ERP in the cloud, we have white spaces in our portfolio for partners to come and develop and then integrate. Our portfolio is becoming more partner-led.
In terms of growth, we need partners to continue to reach and scale and to gain new names and customers. In terms of customer engagement, it’s about making sure our customers receive value to create value and make sure our customers are happy. We need partners for this. Becoming a partner-centric, partner-driven company has been a big shift in strategy.
Q: How do you work with partners to introduce innovations into your solutions?
A: Customers don't necessarily want a specific SAP or partner solution. They want to solve an issue, engage in a business transformation, improve their supply chains, or run more sustainably. To deliver to these customers, we do the core very well, and then we partner to offer an end-to-end solution.
We look at our white spaces and do multiple portfolio reviews. We identify where we want partners to play and look at different solution areas and even industries to ensure we have complete solutions. Then, we invite partners to fill those white spaces. We also emphasize enablement and readiness to make sure those partners can build solutions and integrate them on top of our SAP Business Technology Platform (BTP). We help partners monetize their solutions through the SAP store and incentivize our account executives to sell partner solutions. This is how we innovate and close the circle.
Q: SAP is focused on delivering industry solutions. How does this play into the SAP partner strategy?
A: For comparison, going back to the on-premises days, what customers wanted from and loved about SAP was the depth of our industry solutions. We could take an industry and master it end-to-end.
As we move to the cloud, customers have the same needs. They want SAP to offer the end-to-end solution for their industries with knowledge and depth. But if we were to develop solutions for every industry end-to-end, it would take years. And it would require a lot of investment.
We’ve decided to do this with partners, developing about 20% of these industry solutions, with 80% still needing to be built. Every industry cloud has SAP solutions; some have big and small partners, all of whom will continue to add value.
Q: AI emerged as a central point of focus at SAP Sapphire 2023. How do you integrate this fascinating technology into joint customer engagements with partners?
A: For SAP, AI is not new. We’ve been working with it for years, developing AI capabilities and solutions and working with partners to embed their AI in specific use cases and solutions. Of course, we’re embedding more and more AI into our business solutions. We believe in the concept of business-driven AI.
We want to make sure that AI is in service to the business. If we embed that into SAP solutions so customers can leverage AI in their business processes, we can deliver a better user experience and more value.
We already have partners that deliver AI. A couple of examples include:
- Eightfold is an AI company for learning and recruitment that we’ve been partnering with for 3-4 years, and it’s super successful with our customers.
- Icertis does intelligent contract management.
- Pricefx has embedded AI in its dynamic pricing solution.
- Sapphire Ventures, formerly the SAP venture capital arm, is investing in and screening startups and scaleups; we have a partnership there as well. Together, we screen the market for AI solutions and partners.
- DataRobot is another good example that we recently added to our portfolio.
We’re looking for partnerships that can make a big difference to embed in our portfolio.
Q: As SAP accelerates its cloud-native, go-to-market strategy, how will it change the relationships with established partners who have a successful track record of deploying on-premises solutions as well as new partners that add value to the SAP cloud-based strategy?
A: We have a very loyal, mature, and committed ecosystem. And there are partners whose main business is SAP. They don't want to do anything else because they have enough business with SAP. Of course, we don't want to leave those partners. They want to continue on the journey with SAP. But they're in the midst of a transformation as well.
With a move to the cloud, you have to evolve your practice. You need to change your infrastructure, your processes, your people, your leadership. You need to change your go-to-market strategy, your solutions, and your products.
We are investing to help partners make that shift, but obviously they’re still in transition. As we help them, we need to look at new opportunities and new partners out there with a pure cloud DNA, with a born-in-the cloud approach that we can leverage to continue our growth trajectory.
Q: SAP introduced SAP Build earlier this year. Can you give an example of how this is proceeding with your partners and its customer benefits?
A: The customer benefit is to be more agile when it comes to building innovation: low code, no code, all those capabilities that help the customer be more effective at creating innovation. That's what SAP Build does for the customer, and the partners play a key role. If you look at the new applications being built, this is exactly what our partners are doing. This does not just touch the partners that build, but any reseller or service partner can quickly create applications. SAP Build plays a big role in terms of being more agile and delivering value faster when it comes to developing applications.
Q: Transformation is continual. How is SAP working with partners to future-proof SAP implementations and adapt to constant change in technology, the industry, and the economy?
A: It's all about readiness. We invest a lot in making sure our partners are ready, with enablement and training. We recently launched a new digital learning platform for partners, SAP Learning, to make it easy for partners to get up-to-date training. Some of the offerings, by the way, are free. And we’ve included new certifications, such as the enterprise cloud architecture certification. It’s not just about making them ready; we want them to use what they learn.
There are teams in the field, in every country, that take care of making innovation a reality. They do use cases and provide coaching services. They do what we call Hack2Build events, where we help partners ideate, develop, and innovate to solve business problems.
We also created the Customer Adoption Partner Program, which helps partners and SAP align on what should be done for every customer to realize value. We want to make sure that they build future-proofed solutions. We work together to define what customers want, to define quality standards and expectations that are best for our customers.
Q: Looking forward, what does the second half of the year look like? What are your priorities and aspirations for partners and customers?
A: We want our partners to continue to move our SAP ERP Central Component (ECC) on-premises customers to the cloud and do that with RISE with SAP, using clean core methodology and building extensions on SAP BTP. That's number one. The next step is leveraging the launch of GROW with SAP to increase market share and gain new customers. The third priority is to expand our portfolio by having partners that build on top of BTP solutions that we can include in our portfolio.
Next would be to continue to help and push our partners to drive adoption and transformation at scale while maintaining the highest standards. If we do that right, we achieve only our goals and numbers as well as our aspirations to become partner-centric and partner-driven.
Our priority for customers is the call to action to move to the cloud and leverage innovation. SAP is putting all its innovation on the cloud, because we believe that's the right platform to achieve business transformation, sustainable supply chains, and become better in terms of managing the “green ledger.” That's what we offer with RISE with SAP, GROW with SAP, and SAP BTP.