SAP unveils new channel program for SMB partners

When SAP opens its annual North American Sapphire partner and customer conference here today, one of the keenest attendees will be Bob McHale.

Vice-president and co-founder of Matrix Business Solutions of Calgary, he and his partners have gambled that SAP’s All-in-One application for mid-size

firms is its future.

It’s the only application they sell.

“We’ve hitched our wagon to this horse and are going to live or die with it,” he said in an interview.

A new company born last year by merging two firms that specialized in maintaining J.D. Edwards applications, the partners had become soured by the uproar created when PeopleSoft bought JDE two years ago, followed Oracle’s lengthy hunt for PeopleSoft.

Looking for an alternative enterprise resource management application for SMBs, they settled in December on All-in-One, a tailored version of the full mySAP suite.

Matrix has yet to make a sale, but McHale is hopeful. So he’s come to Sapphire to “get a better feel for the whole (SAP) ecosystem,” and to meet company executives.

SAP is betting a lot on All-in-One and Business One, its Windows-only suite for smaller firms.

P>SAP is betting a lot on All-in-One and Business One, its Windows-only suite for smaller firms.

So much so that it’ s announcing here a new channel program for VARs selling the applications to small and medium businesses.

PartnerEdge is a three-tier program which gives VARs points for both doing transactions such as selling licences and solutions, but also and increasing their capabilities, such as passing training courses and achieving high customer satisfaction.

Resellers at each level (Associate, Silver and Gold) will qualify for increasing benefits such as better margins, product discounts and market development funds.

“”Small and mid-size businesses prefer to buy through the indirect model,”” Ira Simon, SAP’s world-wide vice-president of channel marketing, said in explaining why the company created the program.

“”So to successfully cover the market we need a very compelling channel program that offers great opportunity to partners, great profitability and a big value proposition.””

A blended points system also helps smaller VARs who may not be able to sell big volumes, the company pointed out.

PartnerEdge is one tool SAP will use to recruit partners from Microsoft and Oracle, he added.

He contrasted PartnerEdge with Microsoft’s channel program, which he said is only based on revenue and volume. “”Ours is more focused around quality, selection, solution development, customer satisfaction and other elements along that line. And if we’re able to maintain those things we’ll have partners that are more committed, better prepared and more profitable than Microsoft.””

Some elements of PartnerEdge, such as a portal for members, are available now, but the points system will likely begin early next year.

While SAP is still the dominant player in the ERP market, followed by Oracle and Microsoft, the new program shows it will vigourously broaden its reseller base.

While SAP is still the dominant player in the ERP market, followed by Oracle and Microsoft, the new program shows the extent to which it wants to broaden its reseller base to extend its reach into small and mid-sized businesses.

“I think there is a huge battle playing out, where Microsoft, Oracle and SAP are going after the same resellers,” said Erick Dorr, an industry analyst at Gartner Inc. “They’re looking for vertical expertise.”

“We think this channel is not going to be sold on vision and promises alone. It will depend on who can execute. That will help resellers build a business.”

SAP needs a vigorous channel program if it wants to fend off its two major competitors. Oracle is strengthening its partner network as it swallows PeopleSoft and JDE while merging those applications with its own into one ERP solution in the next three years.

Microsoft has a broad partner channel, although its ERP efforts are somewhat diffused by having four offerings: Navision, Xapta, Great Plains and Solomon.

SAP, known more for attacking enterprise-sized customers, has been quietly building its SMB channel. There are 13 Business One resellers in Canada, and three All-in-One partners.

The company has just ended what it must see as a delightful first quarter, with software revenues of $434 million, (all figures US)up 17 per cent compared to the same period last year.

Software revenues in the U.S. were up 27 per cent over the same quarter in 2004. Total first quarter revenue was $1.7 billion.

To industry analysts, the company is just crusing along nicely.

“SAP is in a commanding position in the enterprise apps market right now,” said Paul Hamerman of Forrester Research.“It’s growing (market) share at the expense of competitors.”“I see consistency and a sense of direction and purpose,” said Dorr of Gartner. Both analysts attended Europe Sapphire in Copenhagen few weeks ago.

As at that event, attendees here are expected to hear the company tout its fledgling Enterprise Services Architecture (ESA), a Web services-based framework that among other things lets partners run new processes on top of existing applications.

SAP credits ESA for letting it form a partnership with Microsoft to develop a new product to link its Office suite with mySAP, a move announced at Copenhagen.

Code named Mendocino, the solution – due next year – is supposed to help give customers access to business information on their desktops.

Dorr admitted that the announcement sparked “heated debate” inside Gartner on its meaning. But he doubts it will “bring SAP to the masses.”

Rather, he believes Office users will most likely tab it for event notification in Outlook and a launchpad into mySAP.

While some ISVs may take advantage of the opportunities Mendocino offers, it won’t be revolutionary, he said.Similarly, Hamerman believes Mendocino will help mySAP usability, but that Office won’t be the primary way users will access it.

Another Copenhagen announcement expected to be echoed here is what SAP calls “dashboards” for business intelligence. It unveiled more than 100 SAP Analytics applications, which can pull data from a variety of sources in and out of mySAP for analysis.

These apps will be sold by partners as mySAP add-ons starting at the end of the year.

Again, SAP says they’re another use of ESA.

“It’s almost like they’re trying to show the world this vision of Enterprise Services Architecture is real,” Dorr said of the attention SAP drew to it at Copenhagen.

“They acknowledge they’re just getting started, but (say) there are already tangible benefits.”

Still, like McHale and his Matrix partners, SAP has made a “leap of faith” with ESA, Dorr said.

“If a large number of key customers take a very conservative approach and don’t buy the value proposition, and don’t make the investments . . . then they’re relegated to a legacy vendor in maintenance mode.”

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Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

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