SAP Channel Chief: We’ll ‘Remove The Barriers’ For Partners In Digital Transformation Quest

Recently appointed chief partner officer Karl Fahrbach, in an interview at last week's SapphireNow conference, promises new engagement models and financial incentives for solution providers and to continue removing barriers to doing business with the software giant.

The opportunity for solution providers to sell SAP software and related products and services will double over the next five years to $202 billion, according to the results of a market research study that SAP announced at the software company's SapphireNow customer and partner conference last week.

And Karl Fahrbach, SAP's chief partner officer for a little more than two months, is promising to give the software giant's legions of channel partners every chance to get a piece of that.

"We want to make sure that we facilitate the partners to capture that opportunity," Fahrbach said of the estimated growth in the SAP market, especially in specific areas such as digital transformation services and resale of SAP cloud software.

[Related: SAP Widens Apple Partnership With New iOS And Mac Apps]

How? "Better models, new commercial models, new financial [incentives] for the partners," said Fahrbach in an interview with CRN at SapphireNow in Orlando. "We want to be sure we give them more access to the technology. We want to be sure we remove the barriers for them and [reduce] costs. To provide easy access to the SAP App Center. All this next-gen partnering is based on that philosophy – making it easier for the partners to capture that opportunity.”

Fahrbach, a 13-year SAP employee who previously held positions as the company's global head of channels and chief operating officer of its Global Partner Organization, was named to the newly created post of Chief Partner Officer in March, following the December departure of former channel chief Rodolpho Cardenuto.

Sapphire Now, and the SAP Global Partner Summit that preceded it on May 6, marked Fahrbach's first major event in his new role and where he spoke about what's ahead for SAP channel partners.

Fahrbach's first task has been to ensure that SAP's Executive Board is behind the company's channel efforts.

"My focus has been on making sure the Executive Board of the company understands the relevance of the [partner] ecosystem. There were three board members present at the Global Partner Summit. I think that shows the commitment now from the board," the CPO said.

"I've been with the company for 13 years and partners have always been important. But now I think they are more relevant than ever. The board understands that without the partners we cannot scale [the business] and we cannot innovate. Without the partners we cannot complete 'the intelligent enterprise.'"

At the partner event, SAP unveiled the results of the SAP-sponsored study by market researcher IDC that concluded that the SAP partner opportunity will double over the next five years to $202 billion. For every dollar of SAP software sold in 2018, partners generated $3.88 through their own value creation – a number that will reach $4.84 by 2023.

The report showed even greater opportunity for partners who embrace SAP's cloud strategy. Partners engaged in SAP cloud generated $5.55 for every dollar of SAP software sold in 2018, a number that will reach $6.48 by 2023. The cloud partner opportunity includes $24 billion captured by partners that lead with software development, $42 billion for partners that lead with resale and integration, and $53 billion captured by partners that lead with services.

Fahrbach is working to remove any impediments that might get in the way of partners' ability to take advantage of those opportunities. In the most channel-significant announcement at Sapphire the company said it will provide channel partners with free 12-month access to the company's S/4HANA Cloud ERP applications and C/4HANA CRM applications for testing and demonstrating solutions based on SAP software – eliminating a fee that started at 5,000 euros (more than U.S. $5,600).

Fahrbach acknowledged that SAP had been hearing complaints from partners about the old practice for several years.

"We wouldn't charge our internal pre-sales people to show our products to the customers. But we were doing that with the partners," Fahrbach said. "That's something we don't want to do any more. We want to be sure our partners are properly equipped the same way we equip our sales team internally to go to market to show our products."

"We want to make it easy for the partners to access our technology… and to build IP [intellectual property] on top of the technology so we can complete the 'Intelligent Enterprise,'" the executive said.

Mike Maiolo, CEO of Rizing, the Stamford, Conn.-based parent company of several SAP consulting firms including Vesta, Aasonn and Synchrony, likes what he's hearing. "They've looked in the mirror and said, 'You know, we're not that easy to work with,'" he said in an interview at SapphireNow.

Maiolo pointed to recent efforts to streamline the qualification process for SAP Solution Extensions, the program through which SAP sells products developed by ISV partners. "They're being creative to help partners with interesting ideas," he said.

In another sign that SAP is thinking beyond the SAP universe, the company also announced a new integration option for the Build engagement model in the SAP PartnerEdge program that's designed to attract partners who build solutions outside of the SAP software environment and want to integrate those solutions with SAP systems.

Previously SAP required that solution providers "build on top of the SAP Cloud Platform in order to be considered part of the ecosystem," Fahrbach said. The change, according to the executive, is recognition that there are "capabilities and IP out there that we don't necessarily need developed on our platform," but could be integrated with SAP systems at the data, content or business process level.

"It's a good extension of their partner program," said Stephen McGerty, enterprise partner lead in the Thompson Reuters' corporate segment, in an interview at SapphireNow. Thompson Reuters participated in a pilot program for the new option, integrating the company's OneSource tax determination engine with SAP's Ariba spend management applications.

McGerty sees the new option as not just a way to integrate software with SAP, but also to create a way for partners to develop go-to-market initiatives with the software company.

Partners can apply for the integrate option in SAP PartnerEdge, Build, exclusively or in combination with other engagement offerings of the SAP PartnerEdge program. The option currently covers most SAP solutions, whether delivered as a cloud service or on-premises deployment, except for SAP Concur applications and experience management solutions from SAP Qualtrics, according to the company.

The IDC study also delved into the opportunities presented by the estimated $2.0 trillion in worldwide spending by 2022 on information technology and related services to implement and manage digital transformation initiatives. The survey concluded that SAP partners with a fully integrated digital strategy have experienced, on average, 43 percent revenue growth compared to 22 percent for the rest of SAP partners.

That includes services around SAP's flagship S/4HANA suite of ERP applications. "We see the highest demand ever for SAP consultants in the ERP area," Fahrbach said.

Last year, SAP launched its C/4HANA suite of CRM applications and in January it completed its $8 billion acquisition of Qualtrics, a developer of customer sentiment/service feedback applications. "Customer experience," SAP's term for the entire software category, was clearly the focus at SapphireNow.

The CPO said that for partners, the sales and service opportunities around customer experience software could one day be bigger than the ERP application market. He also said that SAP is "looking at scenarios" for integrating Qualtrics with C/4HANA and with the company's SuccessFactors human resource management applications – the latter for gauging employee sentiment.

SAP partner Ecenta Digital provides digital marketing and commerce consulting services around SAP's applications. Originally the Waldorf, Germany-based company's focus was on software implementation and integration, but it has been expanding its practice to help customers develop their customer experience strategies, said vice president and general manager Bruce Petillo at SapphireNow.

With acquisitions such as Qualtrics, SuccessFactors and CallidusCloud, SAP finds itself with more customer-facing applications purchased by line-of-business managers – very different from the vendor's traditional focus on IT management, Petillo noted. That, he said, makes solution providers like Ecenta with LoB and vertical industry expertise all the more critical to SAP's success.

Fahrbach, meanwhile, promises to continue evolving SAP's PartnerEdge channel program over the next several years to focus less on partner sales volumes and more on metrics surrounding customer lifecycles and customer satisfaction and retention.

"It will really be around the customer, what is the value the partner is creating for the customer, and the incentives will be geared toward that," he said.