SAP Offers Partners New Cloud Deployment Option For Business One Applications

SAP on Tuesday expanded the cloud deployment options for its channel partners, introducing SAP-hosted Business One software running on the HANA platform for small and mid-size businesses.

The new SAP Business One Cloud deployment services will be sold exclusively through the channel, providing "a competitive entry point for small partners," said Luis Murguia, senior vice president and general manager of SAP Business One, in a phone interview with CRN. The go-to-market model "is 100 percent partner-centric," he said.

Business One is SAP's ERP application set for small and midsize businesses that's sold only through the channel.

[Related: SAP Will Look To Partners To Spur Its Sales Of Anywhere Apps In The U.S.]

SAP, based in Waldorf, Germany, is adding about 5,000 new Business One customers every year, according to Murguia. At an SAP SME Summit event in New York Tuesday the company announced that iMerchandise LLC, a developer of B2B and B2C merchandising applications, is SAP's 50,000th Business One customer.

About 700 solution providers sell the application set, and in any given quarter, 75 percent of partners complete at least one Business One deal, Murguia said.

Business One customers have had the option of buying the software with either a perpetual license or subscription and running it on-premise or, since 2012, in the cloud. There has been a significant shift to the cloud: Today about 80 percent of new customers run the application set in the cloud, Murguia said.

Until now, solution providers who provide Business One in the cloud have had two options: Hosting the software themselves in a private cloud for customers or use a hosting service like Amazon Web Services.

But only about 20 percent or less of Business One partners are big enough to have the resources or sales volume to profitably provide that hosting, Murguia said.

The new SAP-hosted Business One service gives partners a third cloud deployment option. SAP will host the SAP Business One Cloud services running on SAP HANA, the vendor's in-memory computing platform, in SAP data centers.

Channel partners will serve as sales agents for the cloud applications, as well as provide application migration, implementation, management and support services.

"We want the partners to be the single point of contact," Murguia told CRN.

"We are giving customers a choice and partners the opportunity to re-engage with the customer," said Rodolpho Cardenuto, president of the SAP Global Partner Organization (GPO), speaking about the on-premise and cloud options SAP now provides customers and channel partners.

Partners will earn commissions on sales of the new Business One Cloud service and commissions on renewals should they choose to stay engaged with the customer, Cardenuto said in an interview at the SME Summit.

"We would like the partners to stick with the customer," he said.

Murguia said that some cloud application vendors that compete with SAP have focused on selling directly to SMB customers. But scaling up sales efforts under that model can be difficult.

"We think in the SMB segment, the channel is the way to go," Muguia said. "The channel is very strategic and very important for us."

The new service is now available in North America and will be available in Europe and Asia next year. Murguia expects current Business One channel partners will make up most of the first wave of partners to work with the new SAP-hosted offering.

Later, Murguia expects to recruit new partners with expertise in specific vertical markets or with special content and intellectual property that complements the Business One cloud service.

"This will accelerate Business One consumption in the cloud," Murguia said.

In a panel discussion at the SME Summit, several SAP customers spoke about the guidance they received from solution providers in selecting and implementing SAP software.

Tribe Medical Group, for example, implemented an on-premise instance of Business One in July 2014 with help from Illumiti, a Richmond Hill, Ont.-based SAP partner.

"It's been a great product for us," said Davi Pontes, operations manager at London, Ont.-based Tribe. The Business One software is running on HANA and the company's employees have remote access to the applications, according to Pontes.

"We know we needed to go to the cloud," said Andy Zanelli, CEO of Visual Communications, at the SME Summit. Visual Communications is a Poway, Calif.-based manufacturer of illuminated components that is using SAP's Business ByDesign cloud applications for mid-size companies. The company worked with SAP partner FMT Consultants of San Diego to select and implement Business ByDesign.

Par Pacific Holdings, a Houston-based energy company presenting at the SME Summit, worked with Houston-based SAP partner Bokanyi Consulting to implement the SAP Business All-in-One application set.