To address the growing volume and specialized business and technology needs of its customers, SAP is sharing new and expanded tools and services with its partner ecosystem.
In a recent ASUG interview, John Scola, Global Vice President, SAP Software Partners, discussed what he hears from SAP users, how partners are evolving their capabilities and services, and what changes and innovations customers should expect in 2023.
This is an edited version of the interview.
Question: We often start interviews with this question: What are you hearing from SAP customers directly, John?
Answer: Customers ask what they always ask, "How can you help solve my business needs? Can you help in my specific industry? Can you help with this hiring or analytics issue?" It's pretty consistent. The other question is, "How can you help me make the most of my SAP solution?" They're looking to drive higher levels of performance and optimization out of their SAP environment.
Q: Are there some specifics that you're hearing more loudly in 2023, in terms of business challenges?
A: Customers are still on their business transformation journey, but they haven't yet achieved it. I saw a stat that said, “20% of companies have achieved more than 80% of their digital transformation goals.” That's only 20%. That other 80% need a lot of help. And they're looking to our partners to help them complete the journey.
Q: One topic we want to cover is changing customer expectations. Can you discuss that a little bit?
A: In the cloud, the value proposition is, "This is going to be easy." So, customer demand for ease-of-use is increasing. They expect solutions to work out-of-the-box. That’s where our partners come in. Customers say, "Make it work. Make it quick." And our partners are able to do that.
Our partners could address customer needs with custom development. They could configure a solution to do whatever the customer needs. But is that quick? Not really. That could be multiple months or a year-long engagement in some cases. I'm trying to say to software partners, "Don’t do custom development. Make repeatable Intellectual Property. Make IP so you could be like an SAP and sell your own software to meet customer demand.” When a partner builds an app, they can integrate and implement that app so it works with the environment they’re selling into, as opposed to pitching a big custom development project.
Partners that develop IP increase their margin and deliver what customers are asking for, which is, "Get me up and running quickly so I can realize the value of what's been sold to me."
Q: Can you provide more specifics on what customers want in terms of out-of-the-box capabilities and services, and on platforms and applications that SAP offers?
A: Customers are looking to drive use of their solutions very quickly. Our partner DataXstream sold a deal to Pacific Coast Supply to streamline order management. Pacific was looking to roll this out to all areas and their sales teams. It would take around six months or so to train employees and get the SAP solution up and running. Pacific needed to roll it out to all their stores so sales reps could use it as quickly as possible. Six months was too long.
DataXstream came in with their solution, which they built on SAP Business Technology Platform. They reduced training time from four months to four days, which drove an improvement of gross margin of around 1% and drove faster inventory turnover by 30%.
That's an example of a partner driving adoption and ease-of-use using their solution and interface.
Q: Are there specialized partners you are seeing evolve or surface?
A: We've got a lot of partners in the HR space. They work with our SAP SuccessFactors solution set to developing solutions that drive better profiling of candidates. Partners such as Eightfold have built applications that mine job applications and do a better job tying them to skill competencies. This gives the customer a better list of candidates to call and move along the hiring process. It’s not new, but it's definitely in hot demand.
ConvergentIS is a partner that came out of the SAP AppHouse in Calgary. They had a power company customer that was trying to figure out how to convert old electricity meters to smart meters so they could streamline the intake of data and be read via a mobile device. They built a solution based on SAP BTP, which manages the return and distribution of the meters. They delivered real-time visibility into how meters were moving, which reduced warehouse operating time by 15% and created 100% automation of meter movement for the company.
That's the kind of innovation we see and try to drive with partners. They become more specialized, show more value, and stand out from the crowd.
Q: What is SAP actively doing with these emerging challenges for partners?
A: In September we rolled out our new competency framework. It really showcases partners capabilities so customers can quickly understand, "Oh, that partner is skilled in the area I need. I'll go call them."
We also rolled out the free SAP partner demo environment, which allows partners to run different scenarios they haven't been able to run before to show customers how they can meet their needs down to a specific scenario. We created 600 different online and offline scenarios for our partners.
We also rolled out SAP Build, a low-code tool that doesn’t require developer skills.
In the cloud world, a lot of customers want to have a direct relationship with SAP. They want the contract on SAP paper. So how do we help partners in this situation? We created the SAP PartnerEdge Cloud Choice, flex model. It’s a commission-based model that allows partners to own and manage the account while the deal goes on SAP paper. The benefit is that partners are paid commission for managing cloud deals and throughout the customer lifecycle. This has been transformative for us because we've shifted a lot of traditional reselling business to this commission-based business. We launched this in 2021 and it now represents 50% of our total indirect cloud business.
Q: And is that on SAP cloud solutions or on any cloud solution?
A: It is on SAP cloud solutions on our price list and some of our solution extensions business, for example with DocuSign and OpenText.
Q: ASUG is releasing our “Pulse of the SAP Customer” research over the next several weeks. The number one challenge was integration between SAP and non-SAP environments. How is SAP helping the partner ecosystem with this challenge?
A: This is my world. The SAP PartnerEdge Build Program is essentially for software partners to help them drive their business by building IP that integrates with or is built on SAP BTP, which was really developed to address integration and make life easier for customers. The SAP BTP community is extremely active and drives a lot of engagement and collaboration, not just between SAP and partners, but partner-to-partner.
We also offer coaching services. If partners are having a challenge with a particular build, they can register for coaching and align with our development teams to understand what's going on.
We’re also identifying white spaces for partners, making it clearer what solutions they should be building. This drives integration and opens new markets for partners.
And partners can leverage SAP BTP to test, develop, and demo their services.
Our Solution Adoption team helps partners with building applications that are going to be integrating with SAP solutions.
Q: We have partner members and SAP licensee members. Given changing dynamics in the partner world and partner ecosystem, what do you want ASUG members to understand about the changes in the support and what they should do differently?
A: If I were to give customers one thing to think about, I would say SAP is driving innovation with our partners to help get more value out of your solutions. Customers should know that SAP is 100% all-in on our partner ecosystem, whether it is helping partners build innovation, enable customer transformation, or extending SAP solutions.
Under the leadership of our Chief Partner Officer, Karl Fahrbach, and the support of CEO Christian Klein and the SAP Board, the required investments to make partners as amazing as possible to drive great customer engagement and lifetime value is here.
At our recent Customer Success kickoff meeting in Singapore, our sales team and the APJ team brought in partners. Partners have a seat at the table, proving how vital they are for SAP and customer success. Partners are part of the family. We are investing in them and they're reaping the rewards of that investment and as a result customers are getting great products, services, and business outcomes.