SAP’s Cloud Strategy and Partner Ecosystem:

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Can the Software Giant become Accessible, Flexible and Mobile?

by Beth Vanni – Vice President

At the recent SAP Influencer Summit, the software giant came out swinging around their ability to extend their market dominance in applications to the cloud arena. But can their approach to partnering be part of that new religion and give them the flexibility, innovation and scale they defend and grow their marketshare against Salesforce.com, Microsoft, Oracle and others?

At this year’s event key executives reviewed the company’s evolving cloud strategy and product roadmap.  When describing their vision of cloud computing dynamics, they used words like “accessibility”, “flexibility”, “unstructured work streams” and “speed of adoption” – frankly, not attributes the German software giant or its product portfolio has historically been known for. “In 2012 you’ll see a very different dynamic in the cloud business at SAP” stated Peter Lorenz, SAP’s Executive VP of OnDemand Solutions.

The company’s recent $3.4   billion acquisition of SuccessFactors gave the industry pause about how serious the software giant is about accelerating its portfolio and reputation in the cloud arena. Aside from their evolving cloud product family for line-of-business (Sales On Demand, Sourcing On Demand, Career on Demand, and the Business ByDesign suite), the SuccessFactors acquisition brought them an install based of 15 million paying cloud users.  This is a far cry from their BusinessOnDemand suite, which today has only reached about 1,000 customers. Also, the recent announcement of a technology partnership between SAP and Google is a wild card in how fast SAP will accelerate its growth in cloud applications in general or Business ByDesign in specific.  But, regardless of speed, that partnership puts them in the spotlight of cloud coolness and brings 3,000 cloud-savvy partners to the combined ecosystem.

So, where does the high quality, controlled and focused SAP partner community fit in this broad market-dominance plan?  “We will do everything to make our ecosystem successful” touted Lorenz.  And, if you’re one of the SAP ~210 resellers or Global SI’s, you likely already feel the impact of that statement.  It was very clear the company plans to continue to run their on-demand operations directly
and not rely on large carriers or service provider partners operational support any time in the near future.  However, most of their other major competitors are taking that same approach.  SAP has chosen a highly focused, interdependent relationship with its ~ 200 resellers and has resisted pressures to expand that community in any major way.  This stands in stark comparison to the 3,000+ VARs and SI’s from Salesforce.com , the 20,000+ Oracle resellers and SI’s and the thousands of Microsoft cloud VARs and ISVs already enrolled in their Cloud Essentials and Cloud Accelerator programs.

Developing an innovative and broad developer and VAR/SI community will be critical to SAP’s future cloud success. They may not need 100,000+ partners like Microsoft boasts today.  But, they sure need more than 200 resellers.  Cloud-savvy integrators in today’s market are enjoying easier program sign-ups, quick access to SDKs for rapid application extension and lots of on-line training and tools.  SAP’s legacy approach to hands-on business planning, co-selling and partner performance tracking will likely need retooling in the cloud go-to-market space.

As we’ve all watched at various inflection points in the IT market, simply being first to market does not equate to market dominance –nor does having lots of partners.  And, when a company like SAP with 176,000 customers and dominant marketshare decides to invest in an emerging technology, everyone watches.  But, we think the rate of change required for SAP to keep its go-to-market partner ecosystem in step with its cloud growth plans will be very challenging.  It will represent some major partnering paradigm shifts –  just in trying to leverage the Google partnership through channels alone.   Flexible, accessible, unstructured?  It should be an interesting gymnastics exhibition to watch……

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