SAP Channel Chief: Cloud Requires More Discipline


As the channel as a whole become more proficient with all things cloud it’s becoming apparent that not only is IT being transformed, the way solution providers need to manage their operations is fundamentally changing.

Rather than being whole dependent on transactions that occur in a specific quarter, cloud computing extends out the period for which the solution provider is compensated. Most cloud computing contracts typically wind up being based on a monthly bill over a multiyear timeframe. Solution providers usually receive a fair amount of that money up front when reselling services, while other revenue gets recognized over the life of the contract.

Tracking all those deals, says SAP channel chief Kevin Gilroy, requires more discipline than ever on the part of the solution provider at a time when many vendors are transforming how they go to market.

In the case of SAP, the rise of cloud computing has coincided with a marked increase in reliance on the channel. In fact, SAP says that 33 percent of its sales are now made through the channel. A key part of that success has been the development of 150 Rapid Deployment Solutions (RDS) that make it a lot easier to deploy SAP applications outside of Fortune 1000 customers that typically have a lot tolerance for expensive professional services engagements. SAP says there are now over 1,700 customers running at least one RDS offering.

Jeff Winter, SAP vice president of marketing, says 43 percent of RDS sales are now moving through the channel, which he says is capability that SAP developed in recognition of the fact that large and small customers alike in a down economy have less of an appetite for IT projects that have extended periods of return on an investment.

Meanwhile, SAP continues to push its SAP Business ByDesign applications running in the cloud and SAP Business One applications running on premise or hosted by solution providers, which are cornerstones of the company’s push into the small-to-medium business (SMB) market, through the channel. The end result is a much more vibrant SAP channel than any time in SAP history.

There’s no doubt that from a channel perspective SAP is now a fundamentally different company both inside and outside of the cloud. How many solution providers will choose to engage with SAP remains to be seen. But as time goes on the odds are good that SAP will emerge as a force to be reckoned in a channel environment that can always use another application vendor to, at the very least, help drive additional services revenue.

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