Cancel the funeral and send back the burial flowers. Reports or SAP’s demise are largely exaggerated, according to the company’s channel team. Sure, much of the media continues to raise questions about SAP’s business performance. But Kevin Gilroy (pictured), VP of SAP’s North American SMB partner effort, says SAP is winning roughly 25 new customer deals per day. And Gilroy is preparing some channel moves to help SAP partners “rip out” Oracle solutions and put in SAP. Will the strategy work? Here’s some perspective from the show floor at SAP Sapphire in Orlando, Fla.
First, some proper perspective and balance. No doubt, SAP has hit considerable bumps over the past two years or so. In addition to hit-and-miss financial results, SAP has encountered:
- Executive changes;
- SaaS delays; and
- heightened competition from entrenched giants like Oracle and SaaS upstarts like Salesforce.com and NetSuite.
Or as Dorothy might say: Lions and Tigers and Bears, Oh My. SAP seems to be under attack on all fronts, which has triggered red flags within the mainstream business media.
The Glass Is Half Full, Not Half Empty
Now, shift your attention to Kevin Gilroy, the HP and Arrow Electronics veteran who now runs SAP’s North American SMB partner efforts. During a sit-down with The VAR Guy yesterday, Gilroy was pretty darn chipper. And he sounded confident.
Why’s that? Gilroy says SAP is signing up 25 new customers every day, and that figure continues to climb regularly. Plus, he asserts, the SAP product set remains “extremely compelling.” And finally, end-customer satisfaction levels with SAP’s channel partners remains “rock solid.”
But here’s the challenge: Gilroy wants channel partners to “rip and replace” Oracle applications with SAP applications. No doubt, Gilroy ran similar strategies in the PC and server hardware markets while at HP. But can “rip and replace” really work in the software market — where customer inertia can be quite high?
“I agree, the software market is stickier” in terms of customer loyalties and customer inertia, Gilroy conceded. “But remember, my previous work also involved getting customers to move from big IBM AS/400 and IBM AIX investments to HP-UX. We’ll do the same here [vs. Oracle] because the SAP product set is extremely compelling.”
In order to accelerate SAP’s channel success, the company is building upon three pillars, according to Gilroy. They include:
- Marketing Dollars: SAP already spends “millions of dollars’ to develop and funnel leads to channel partners, Gilroy says. “You’ll see that number quadruple as we get laser focused on the SME space,” Gilroy asserts.
- SME Momentum: Although SAP is best-known as an enterprise player, Gilroy asserts that SAP is a “huge player” within small and midsize enterprises, where “many of our product sets are No 1.”
- Channel Momentum: “We’ll invest to grow the VARs and help them push into new markets. We’re recruiting additional VARs and we want to put 1,000 new feet on the street.”
The VAR Guy asked if that figure involved 1,000 new individuals or 1,000 new VARs. Gilroy was a bit coy, indicating that it involved a mix of master VARs, large VARs and niche VARs.
To help with the channel efforts, SAP continues to leverage its existing talent while blending in additional executives. One recent hire is Annie Neubrech, the former senior director of sales operations and channel programs at Intermec. And it sounds like more channel hires will be disclosed shortly. “We [SAP] had world-class channel talent before I got here. And now we’re mixing that talent with a fresh set of eyes,” says Gilroy.
Meanwhile, Gilroy also has high hopes for SAP Business ByDesign — a mid-market SaaS platform. “Partners are really jazzed about ByDesign,” asserts Gilroy. “Our phone is ringing off the hook. Partners want to get into the game.” Still, Gilroy concedes, SAP will proceed slowly with Business ByDesign before really ramping up a partner-oriented approach by late 2010 or early 2011.
Re-read the notes above, and Gilroy certainly sounds upbeat. But check the news wires, and plenty of business critics continue to question SAP’s overall health.
No doubt, customer and partner engagement seemed strong at the SAP Sapphire conference. The VAR Guy will be watching to see if that translates into new channel business…
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In general, the bigger a company gets, the dumber it behaves.
SAP has been remarkably resilient over the years for the same reason that GM survives — Brand power.
Nobody gets fired for going with SAP.
Sam: The VAR Guy spent some time at SAP’s partner conference as well as SAP Sapphire. Our resident blogger was surprised by the level of partner engagement. Media/journalists sometimes are guilty of choosing sides… painting a company as “all good” or “all bad.” In this case, SAP certainly faces its challenges amid executive changes and a shift away from extremely complex apps that take extended periods to customize. But on the other hand, The VAR Guy is hearing success stories from SAP hosting providers and Business Objects partners…
-TVG
We run in circles closer than you know, VAR guy. There’s no doubt that SAP is hugely successful and their partners are, as a rule, very strong. They’re strong because they make money. The brand is the reason why. Like Apple, SAP has built a channel and an image which will sustain them over time.
I did not mean to compare SAP to GM in any other way. (But my post makes it sound that way!)
;}
Sam: Thanks for coming back to update your thoughts. The VAR Guy appreciates the repeat visit
Best,
-TVG