Profit from the SAP Ecosystem E-Book

Ralf Meyer

• Herausgeber: Books on Demand
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 351

Veröffentlichungsjahr: 2017

Beschreibung

Profit from the SAP Ecosystem: Thanks to over USD 23 billion in sales revenues, 355,000 customers and 87,000 employees, SAP is the world's 3rd largest software company. The SAP ecosystem is the largest business software community worldwide, with more than 15,000 official SAP partner companies, millions of experts and impressive KPIs like: - SAP "touches" more than USD 16 trillion of the world's B2C purchases - 74 percent of the world'stransaction revenues run thru SAP systems - SAP banking customers manage assets worth more than $70 trillion - The SAP Ariba business network runs transactions valued $1,250b in 2016 - Estimated total annual customer spending of USD 309 billion This book is a guide to SAP ecosystem opportunities, challenges and how to successfully manage them. It targets management, sales, business and channel development. It combines startup methodologies with SAP ecosystem best practices, including business model and value proposition design, SAP solution alignment, go-to-market, and much more. The authors of this book are a team of experienced SAP ecosystem experts, who have collectively achieved the following: - Work over 57 years at SAP and for 282 years in the SAP ecosystem - Add 46 partner products to the SAP price list - Complete 65 SAP software certifications - Win 1,200 SAP enterprise customers directly and 1,800 via partners - Found the SAP partner association "IA4SP" (www.ia4sp.org) - Support the European Workshop on Software Ecosystems (www.ewseco.org) - Globalize software startups and support M&A - Translate 20,000,000 SAP lines into 28 languages

Leseprobe

Dedicated to the loved ones of the Synomic team.

For Almut, Sebastian, Caroline and Christian. R.

For Sigrun, Christina Hildegard and Justus. M.

And the countless heroes of the SAP ecosystem!

Table of Contents

INTRODUCTION

1.1 P

REFACE BY

P

ETER

M. F

ÄRBINGER

1.2 P

REFACE BY

R

ONALD

T

ETTEROO

1.3 A

CKNOWLEDGEMENTS

1.4 W

HY SHOULD YOU READ THIS BOOK

1.5 W

HY

SAP?

1.6 W

HY PARTNER WITH

SAP?

1.7 W

HY YOU SHOULD READ THIS BOOK

SAP IN THE SOFTWARE INDUSTRY

2.1 SAP’

S RELEVANCE IN THE SOFTWARE BUSINESS

2.2 V

ALUE CHAINS IN THE SOFTWARE INDUSTRY

2.3 SAP’

S HISTORY OF GROWTH

2.4 C

LOUD BUSINESS

2.5 B

USINESS

N

ETWORKS

2.6 L

EVERAGING THE ECOSYSTEM

2.7 SAP’

S STRATEGY FOR FUTURE GROWTH

THE SAP ECOSYSTEM AND HOW YOU PROFIT FROM IT

3.1 SAP E

COSYSTEM

O

VERVIEW

3.2 W

HAT

’

S IN IT FOR

SAP

3.3 W

HAT

’

S IN IT FOR SOFTWARE COMPANIES

3.4 SAP

CUSTOMERS AND THEIR ECOSYSTEM

3.5 SAP C

OMMUNITIES

3.6 SAP

PARTNERS AND PARTNER COMMUNITIES

3.7 S

TANDARDS BODIES

BUSINESS MODELS AND DESIGN THINKING

4.1 C

HAPTER SUMMARY

4.2 T

HE

B

USINESS

M

ODEL

C

ANVAS

VALUE PROPOSITION

CHANNELS

CUSTOMER RELATIONSHIPS

REVENUE STREAMS

KEY ACTIVITIES

KEY RESOURCES

KEY PARTNERS

COST STRUCTURE

4.3 B

USINESS

M

ODEL

C

ANVAS FOR THE

SAP

ECOSYSTEM

4.4 C

ONSIDERING

E

XTERNAL

F

ORCES

4.5 V

ALUE

P

ROPOSITION

D

ESIGN

HOW TO DESIGN YOUR VALUE PROPOSITION

SAP CUSTOMER SEGMENT

SAP ECOSYSTEM VALUE PROPOSITION

NEXT STEPS

REVISITING THE BUSINESS MODEL CANVAS

4.6 D

ESIGN

T

HINKING

INTRODUCTION

BASIC CONCEPT OF DESIGN THINKING

BENEFITS AND BEST PRACTICE

SAP PARTNERSHIP MODELS

5.1 SAP P

ARTNER

E

DGE

5.2 SAP

PARTNER TYPES AND CATEGORIES

5.3 O

VERVIEW OF PARTNERSHIP MODELS

5.4 P

ARTNERS CREATE APPS ON

SAP

PLATFORMS

5.5 P

ARTNER

E

DGE

B

UILD

5.6 SAP-

CERTIFIED SOLUTION PARTNERSHIP

5.7 R

EVENUE SHARE FROM PARTNERS TO

SAP

5.8 D

ISTRIBUTION OF

SAP

SOFTWARE BY PARTNERS

(

OUTBOUND

)

5.9 D

ISTRIBUTOR

5.10 SAP P

ARTNER

E

DGE

C

LOUD

C

HOICE

R

EFERRAL

5.11 SAP P

ARTNER

E

DGE

C

LOUD

C

HOICE

P

ROFIT

O

PTION

5.12 SAP P

ARTNER

E

DGE

S

ELL

5.13 O

UTBOUND

OEM

5.14 E

MBEDDED

P

LATFORM AS A SERVICE

(

E

P

AA

S)

5.15 P

ARTNER

E

DGE

R

UN

5.16 SAP

OUTSOURCING OPERATIONS PARTNER

5.17 P

ARTNER

M

ANAGED

C

LOUD

5.18 SAP

RESELLS PARTNER SOFTWARE

:

SOLUTION EXTENSIONS

5.19 SAP

SHIPS PARTNER SOFTWARE

:

INBOUND

OEM

5.20 S

OFTWARE DEVELOPMENT COOPERATION

5.21 I

NBOUND CO

-

DEVELOPMENT

5.22 E

NTERPRISE

S

ERVICE

C

OMMUNITY

BUSINESS DEVELOPMENT AND PARTNERING

6.1 S

ECTION SUMMARY

6.2 SAP

PARTNERING

WHY DO YOU REALLY WANT TO PARTNER WITH SAP?

POTENTIAL BUSINESS DRIVERS

UNDERSTANDING THE SAP PARTNER LIFECYCLE

6.3 SAP

CERTIFICATION AS AN ENTRY POINT

6.4 SAP P

ARTNER

E

DGE

6.5 L

EVERAGE

(SAP)

PARTNERS FOR YOUR BUSINESS

BENEFITS IN SERVING TARGET MARKETS WITH (SAP) PARTNERS?

PARTNER MANIFESTO

WHY SHOULD SAP PARTNERS BE INTERESTED IN YOU?

ENGAGEMENT

WHY DOES PARTNERING FAIL?

WHAT MAKES PARTNER INITIATIVES MORE SUCCESSFUL?

6.6 SAP S

OLUTION

E

XTENSION PARTNERS

(S

OL

E

X

)

WHAT ARE SAP’S MAIN DRIVERS FOR SOLUTION PARTNERING?

CHEAT SHEET FOR THE SAP SOLUTION EXTENSION PARTNERSHIP

SAP SECURITY AUDITS

PENETRATION TESTING

OPEN SOURCE AUDIT

6.7 B

EST PRACTICES FOR

SAP

ECOSYSTEM BUSINESS DEVELOPMENT

6.8 SAP L

ICENSING

WHAT IS DIFFERENT IN THE SAP ECOSYSTEM?

WHAT IS IMPORTANT WHEN SELLING IN THE SAP ECOSYSTEM?

WHAT CAN AN SAP PARTNER DO?

GO-TO-MARKET IN THE SAP ECOSYSTEM

7.1 S

ECTION SUMMARY

7.2 G

O

-

TO

-

MARKET PLAN

BASIC ELEMENTS OF GO-TO-MARKET (GTM) EXECUTION

SALES STRATEGY

GO-TO-MARKET RECIPE

7.3 SAP

SOLUTION ALIGNMENT

SAP SOLUTION MAP FIT

SAP ROAD MAPS

SAP TRANSFORMATION NAVIGATOR

7.4 I

TERATIVE

(

PARTNER

)

PROCESS PLAYBOOKS

USE AND BACKGROUND

INTRODUCTION

ADVICE FROM THE AUTHORS

7.5 SAP

ECOSYSTEM POSITIONING

PARTNER WHITEPAPERS

SAP PARTNERING FACTSHEET/CHEAT SHEET:

CREATE YOUR SAP ECOSYSTEM PITCH DECK

7.6 SAP J

ARGON AND

SAP T

RANSLATION

LANGUAGE AND TRANSLATION PARTNERS

FACTS, FIGURES, AND EXAMPLES

7.7 D

EMAND AND LEAD GENERATION

HOW CAN CUSTOMERS FIND THE RIGHT PRODUCT?

7.8 S

ELL MORE SUCCESSFULLY IN A SATURATED

SAP

MARKET

SALES CHALLENGE

WHAT IS NEEDED?

BEST PRACTICES

DEFINE YOUR SAP ECOSYSTEM STRATEGY

8.1 S

ECTION SUMMARY

8.2 H

OW TO DEVELOP YOUR STRATEGY

8.3 E

XAMPLE OF

SAP

ECOSYSTEM STRATEGY DEVELOPMENT

8.4 360-

DEGREE STRATEGY ASSESSMENT

8.5 A

DVICE FROM THE AUTHORS

:

CONCLUSION

9.1 R

ECOMMENDED SUPPORTERS AND TOOLS

9.2 E3 M

AGAZIN

9.3 IPP P

ROCESS

P

LAYBOOK

9.4 M

ODELYZR

9.5 N

EXT

L

EVEL

E

XPERT

9.6 O

PEN

S

OURCE

B

EST

P

RACTICE

9.7 OSCONOMY

9.8 S

YNOMIC

9.9 W

ORDFLOW

T

RANSLATION

9.10 APPS4-ERP

9.11 L

EVERAGE

SAP A

RIBA FOR YOUR BUSINESS

9.12 G

O

-

TO

-M

ARKET AND

S

ALES

Q

UESTIONNAIRE

9.13 S

CORING TOOL FOR ECOSYSTEM READINESS

9.14 SAP E

COSYSTEM

B

USINESS

M

ODEL

C

ANVAS

9.15 SAP E

COSYSTEM

V

ALUE

P

ROPOSITION

C

ANVAS

9.16 R

ECOMMENDED READINGS

9.17 A

CRONYMS USED IN THIS BOOK

INDEX

1. Introduction

This book was written with the help of an experienced team of SAP ecosystem experts, including: Ralf Meyer / Thomas Kamper / Dieter Wolf / Gerhard Keller / Franz Baljer / Timo Klemm / Sven Lange / Volker Löhr / Isabella Musso / Nils Niehörster / Andrea Rösinger / Thomas Schmischke / Oliver Schreiber and Ronald Tetteroo.

Figure 1: Co-Authors

1.1 Preface by Peter M. Färbinger

Create confidence, win USP

SAP is a German success story that began in 1975 with five German IBM engineers near Heidelberg. Today, it is a global company with USD 23 billion in sales revenue, 335,000 customers in 180 countries, and 87,000 employees. SAP is also an ecosystem for enterprise software with over 15,000 official SAP partners, tens of thousands of "unofficial" partners, and millions of experts, users, and universities across the world.

SAP’s initial strategy was simple: It enlisted the help of its customers to develop ERP software. Its users brought – and still bring – expertise to the table. SAP is the software developer and vendor. Other software companies supplied the required operating systems, middleware, and databases. Then, a steadily growing number of SAP partners and consultants began handling the Customizing.

This ecosystem of customers and partners together with SAP is most certainly the driving force behind the success of the ERP software. SAP’s success began with building a partner landscape based on fundamental values such as trust, division of labor, and reliability. While SAP developed R/2, R/3, and ERP/ECC 6.0, its partners put together the hardware, supplementary software, operating systems, databases, middleware, Customizing, and training.

Large consulting firms and system integrators played their part in ensuring that everything was put together correctly. SAP’s global success is truly thanks to the work of industry giants such as Accenture, IBM, and HP as well as numerous other partners. And SAP customers received the best solution because every expert added value to the overall picture.

But then the world became increasingly complex: SAP began developing software solutions that went far beyond its core ERP business – NetWeaver as middleware, process integration, Hana as a database, SAP Solution Manager (SolMan) as monitoring and support software, etc.Not only did this cause the SAP portfolio to “explode” and the price list to exceed ℯ pages, many partners suddenly found themselves faced with serious challenges because their supplementary solutions were now considered to be in direct competition with SAP software. The trend toward cloud solutions has only added to the pressure in the ecosystem.

The SAP ecosystem is still in full swing. After all, tens of thousands of software and consulting companies with millions of SAP experts are still reporting revenues in billions each year. However, coasting on this success would be the wrong strategy. Current developments at SAP mean that its partners must adapt their strategies and their portfolios, and find new unique selling propositions (USPs).

You will want to talk to your colleagues in the SAP community and other experts to learn how you can adapt your strategy, your product range, and your USP to the inexorably changing conditions. This is where countless user groups, working groups and congresses, and special interest media (print and online) can help you move forward. The team that put together this book has collected a great deal of information to introduce readers to new methods and best practices to design and implement better business strategies for the changing SAP ecosystem.

Peter M. Färbinger

Editor-in-Chief E-3 Magazin and e3zine.com

Peter M. Färbinger has been Editor-in-Chief of E-3 Magazine, the most widely read, independent information medium for the German-speaking and, more recently, international SAP community (e3zine.com) for 18 years.

1.2 Preface by Ronald Tetteroo

You can profit from the SAP ecosystem!

The SAP ecosystem is a very attractive business opportunity for any enterprise software company. Not just because of the huge number of business customers in the ecosystem, but also because of SAP’s unique approach to partnering.

Unlike many other business software vendors, it is possible here to develop a sustainable business if you define and implement the proper strategy.

Done properly, this will be rewarded by growing revenues from prestigious enterprise customers and help you propel your company to a new professional level and significantly increase overall company valuation.

It is important to understand that partnering with SAP cannot be accomplished casually: It requires excellent preparation and the right strategy. This endeavor is comparable to that of mountaineers who very carefully prepare their trips up mountains that lie 8,000 m above sea level, rather than to tourists relaxing at the beach.

This book describes the basic rules and inner mechanics of the SAP ecosystem in as much detail as is needed. It also provides guidance and advice from experienced experts who have accomplished outstanding results.

Trust me when I say that it is worthwhile to learn the specific secrets of the SAP world and properly leverage the methodologies and tools described to develop and execute a winning SAP ecosystem strategy.

Although we have been an SAP partner for many years, we found that we learned a great deal during our journey through the ecosystem.

In particular, aligning our solutions and company strategy with SAP’s industry-specific business units helped us substantially increase revenues and improve the entire company on all levels including, solutions, management, and quality, ultimately giving a significant boost to the company valuation.

In this respect, I have to thank Gerhard Keller, Ralf Meyer and many SAP experts for guiding me on this very enriching journey.

Dr. Ronald Tetteroo

Advisor, Entrepreneur and Investor

Ronald Tetteroo has been in the IT industry since 1999. He was instrumental in building a showcase for Watchfire at one of the largest pharmaceutical companies in the world, leading to a major acquisition by IBM of Watchfire in July 2007. He also played a crucial role in successfully implementing the SAP ecosystem strategy at StreamServe and in the acquisition by Open Text October 2010.

Dr. Tetteroo, who resides in the United Kingdom, is a passionate musician and cofounder of the Hermes House Band, which has sold more than 16 million records.

www.linkedin.com/in/ronaldtetteroo/

1.3 Acknowledgements

This book describes the opportunities for software companies in the world’s largest business software ecosystem, but also the inevitable challenges and how to manage them to accomplish success in a changing digital world.

The book was written with the help of an experienced team of SAP ecosystem veterans cumulating both broad and deep global expertise.

In total, they worked more than 55 years inside SAP and more than 250 years in the SAP ecosystem.

During this timeframe, they managed to add more than 45 partner products to the SAP pricelist (SAP Solution Extensions) and 60 SAP software certifications. They acquired more than 1,000 SAP direct enterprise customers and won more than 2,000 accounts with help of partners.

The co-authors founded the “International Association for SAP Partners (IA4SP.org)” and the “European Workshop on Software Ecosystems (EWSECO.org),” globalized software startups and supported mergers and acquisitions (M&A).

The book combines up-to-date Silicon Valley startup methodologies such as business model and value proposition design with proven SAP ecosystem best practices including SAP solution alignment and many more.

Target readers are business development managers, SAP alliance managers, founders, investors, partner managers, researcher and salespeople.

Thank you all!

Of course, it was not possible to write this book without the help of many people.

My thanks to the great team of co-authors who supported this endeavor. You are not only part of a great community –you are truly amazing!

I would like to use this opportunity to especially thank Melanie Lutz and Eva Schneider from Wordflow Translation in Walldorf for their great job in proofreading this book. Any remaining bugs are solely my fault and not of the very nice and highly professional SAP-certified language experts in Isabella Musso’s company!

My thanks go to our great clients, startups and partners who have always been a great source of challenges and lessons to learn; and the Synomic team for background support – especially Thomas for his fun & wisdom ;-)

Friends including Jürgen Beckers, Peter Buxmann, Steve Blank, Tim Clark, Daniel Faulk, Howard Lau, Slinger Jansen, Paul Jozefak, Thomas Koulopoulos, Alexander Osterwalder, Antonio Palacin, Detlef Schulz, John Spencer, Jörg Sievert, Günther Tolkmit, Ralph Treitz and many undisclosed SAP “ecosystem heroes” have been my inspiration for many years and have provided valuable guidance for my work in the software ecosystem.

Thank you very much!

Ralf Meyer

Walldorf, September 2017

Ralf Meyer is a software ecosystem and startup “activist”, who worked 15 years at global software players Software AG and SAP and for 15 years supporting international software and cloud companies and startups. He is co-founder of the IA4SP, EWSECO and currently works as a management consultant and interim manager at Synomic and other companies.

www.linkedin.com/in/ralfmeyer

1.4 Why should you read this book

This section contains the background and motivation as to why SAP is a tempting business opportunity for partners, why SAP is a valid option for partnering success, and why you need this book to create a successful partnership with SAP.

1.5 Why SAP?

Section summary

This section illustrates that SAP is truly a proven business success story, a great source of new customers as well as partnering opportunities for enterprise software across all industries and all geographic regions. Today, SAP is more than just a leading ERP software company. SAP has multiple world-class best-of-breed applications like CRM and SCM, numerous cloud solutions, and industry solutions, among others. In addition, SAP offers comprehensive software infrastructure as well as platforms (i.e. SAP HANA and SAP cloud platform) to build enterprise solutions. SAP is also very well known for long-term “stickiness” for both partners and customers, which enables long-term relationships and sustainable business success for the entire SAP ecosystem.

A history of success

SAP has leveraged its position to be a pioneer in standardized business software since the late 1970s. It rapidly grew, serving the demand of large companies to standardize their business operations. Then SAP started to diversify its offering to serve twenty five industries and soon SAP also diversified its offering to fit companies of different sizes from very small with its SAP Business One solutions to very large with its ERP and cloud solutions. At the same time, SAP globalized its business operations and built strong presences in the Americas and Asia and is now having more than 87,000 employees worldwide.

SAP is a long-term growth story of successfully doing business with more than 355,000 customers. Although SAP is doing great in selling products to their customers, there are a lot of untapped business opportunities for SAP. One being feeding, extending and monetizing the ecosystem of partners and customers around SAP. SAP is aware that one important source of current and future growth is their partner ecosystem. Establishing win-win relationships with software partner companies is a key prerequisite for SAP’s future success. This is why software companies should be knowledgeable of SAP partnerships and have a proper game plan to leverage this opportunity. This is what this book is all about.

SAP has always planned for long-term survival of itself and SAP’s customer relationships. It has become a trusted and reliable business partner of companies of all sizes while ensuring long-term engagement of customers. Customers rely on SAP for running their mission-critical business processes, which creates stickiness for SAP’s products in these customers. SAP support has also proven the dedication of SAP to make sure the core business processes at customers are properly supported to ensure business continuity and business success.

So, what is in it for SAP’s partners? Long-term binding of SAP’s customers also applies to SAP’s partners. Once you get engaged with SAP customers, it is also a long-term monetization opportunity for you.

A source of industry opportunities

SAP is present in many industries. No matter what your solution is, there is a place in the appropriate industry at SAP as well. And it is not just the development organization at SAP that is organized by industry; sales and consulting are organized by industry, too.

At SAP, the industries include banking and insurance industries, defense and security, higher education and research, healthcare and public sector, aerospace & defense, automotive, chemicals, consumer products, engineering, construction & operations, high tech, industrial machinery & components, life sciences, mill products, mining and oil & gas. Other industries are hospitality, logistics service providers, media, postal services, professional services, railways, sports & entertainment, telecommunications, utilities and waste & recycling, retail and wholesale and distribution.

A source of customer opportunities

With over 355,000 customers in 2017, SAP is a rich treasure chest for additional business for SAP itself and partners. No matter if your solution is focused on a specific industry or if you have a horizontal solution, SAP has showcase customers large and small in every country to be leveraged by you. And SAP has a plan to aggressively grow its customer base to reach more than 1 billion people by 2020. All sizes of companies in all industries, distributed all over the world are waiting for you to leverage them. The question is how you can leverage it. This is what this book is all about.

A source of partnering opportunities

SAP has proven it can engage in partnerships with software companies, and create and execute revenue share and resell partnerships. SAP also has a very successful track record with system integrators. These system integrators (SIs) have grown substantially with SAP and SAP has grown with the SIs, too.

In addition, SAP addresses further improvements of their partnering with a number of initiatives. SAP dedicates many resources to enabling partner integration, to joint go-to-market engagements and to selling partner solutions. The stage is set for both SAP and partners to grow.

The “bad” news is that SAP now has a myriad of partnering opportunities. Sometimes it is hard for partner companies to select the right partnership model to be successful. This book is all about providing support for deciding on the right strategy and the right SAP partnership model. It provides details about the partnership models, the SAP goals behind and real-world examples from these different partnership models, and it gives guidance to develop and execute the strategy.

1.6 Why partner with SAP?

Section Summary

There are several reasons for partnering with SAP, with of course “making money” as the number one goal. SAP is open for partnering, SAP is ready for partner success, offers several partnering options and established a significant number of partnerships, representing an impressive track record of successful partnering.

SAP is looking for new revenue streams

In its well-balanced growth strategy, SAP is always looking for new revenue streams from and with its partners. Partner products are promising up sell opportunities in existing customers, partner companies are a good source of new customers for SAP, partners using SAP’s platform offerings are paying for using the platforms. SAP is willing and able to create win-win partnerships with partner to generate new revenue streams for SAP. In specific partnerships, partners can resell SAP products and are incentivized for helping SAP to sell.

SAP open for partnering

In general, SAP has opened up to work with partners and has started to invest and monetize on partners and their ecosystems, too. SAP has clearly lost its perception to be hard to partner with. It has also created a dedicated organization, Global Partner Organization (GPO) as well as regional (e.g. EMEA, NA, APJ) and local organizations (e.g. Germany, USA) to work with partners. This group is part of the sales organization, which allows immediate involvement in sales processes and opportunities.

SAP has prepared for partner success

SAP has taken significant steps forward in allowing and enabling partners to create revenue with SAP. No matter, if you just have a technical integration of your solution with SAP’s solution or if SAP resells your solution, SAP has engineered the required processes and services.

Over the course of the last years, SAP has created partner programs from value added resellers (VARs) to software partnerships for their hosted solutions and cloud offerings. So, let us have a look at the different options.

SAP has several options for partnering

A number of initiatives and programs have been successfully established over the last two years. An important differentiator of partnership models is the joint go-to-market (GTM) defined for the partnership. Low-impact GTM means usage of SAP logos, mention on a SAP portal or web page, but no further joint GTM. High-impact GTM means that SAP and partners are sharing customer prospects and are jointly going to market with a defined budget and headcount explicitly dedicated to the partnership.

Looking at the sheer number of low-impact and high-impact partnerships, there is a clear distinction in the SAP strategy behind partnerships:

Low-impact partnerships are targeting economies of scale for SAP: low SAP investment and involvement, massively increase the number of partners. Examples are certification programs, SAP HANA, SAP open ecosystem partnerships, SAP PartnerEdge, and the SAP Referral Program explained later in this book.

High impact partnerships are targeting massive increase of revenue for SAP while strengthening the portfolio of SAP: high investment (budget and headcount) by partners and SAP, defined sales projections, sales execution monitoring and governance.

Examples are partner solutions resold by SAP, SAP solutions used as OEM component or resold by partners among others.

SAP has a proven track record of successful partnering

SAP has massively invested in preparing for partnering success. It also has a number of successful partnerships in stock.

In the area of resell partnerships, SAP has created high revenues with Adobe and Redwood with selling their solutions as co-branded solutions to SAP customers.

SAP is also successful establishing industry-specific resell and revenue-share opportunities for partners. Partners can leverage the power of the industry-specific sales force at SAP as soon as their offering is properly positioned in an industry. Partners with data centers can also run SAP cloud solutions for their customers.

With so many options to choose from, you need help to choose the right fit of partnership models for your company growth strategy. This is what this book is all about. It will give you decision support for selecting the right strategy. Based on a detailed analysis of the budget, resources to be spent, timing needed, growth strategy and other factors, you will be able to select the right partnership model with SAP.

Professional partnering help is available

Since a lot of software companies would like to partner with SAP and there is a large amount of different partnering models, the demand for help has mobilized organizations outside SAP specialized on consulting, enablement and marketing services for SAP partner companies.

A good starting point is the International Association for SAP partners (IA4SP) e.V. a non-for-profit organization founded by some of the co-authors of this book. Experienced SAP community experts one of the more that 130 IA4SP member companies can surely help you.

Another example is Synomic, a German consulting and interim management boutique, specializing in the support of creating successful software company partnerships with SAP. Seasoned alliance specialists can help you assess, design, implement and execute your SAP ecosystem strategy leveraging their long-term experience.

1.7 Why you should read this book

Chapter Summary

This book is all about generating revenues and profits in the SAP ecosystem and shows you how to prepare for success and execute on your partnering strategy with SAP.

It combines latest Silicon Valley startup methodologies with proven SAP ecosystem best practices and always refers to real-world experiences of existing partners, giving you valuable insight from multiple companies who already profit from the SAP ecosystem.

Many hints, cheat sheets and shortcuts will help you establish or improve your SAP business as quickly as possible.

Define your strategy

First, you have to make sure you know what your goals and strategy are. You may want to grow in a specific industry, in a specific global region, at a specific rate, etc. All this information has to be taken into account to create your growth and partnering strategy with the SAP ecosystem. This book helps you create your strategy.

Know the opportunities

Second, this book will provide insights on SAP’s many partnering offerings. You have to know about the many opportunities in the SAP ecosystem, the SAP partnership models and all the details to make a successful partnership. This book will provide you with evaluations of SAP partnering models from live SAP partners and will define prerequisites for success in partnering with SAP.

Select the right partnering strategy

Third, you leverage your defined strategy and available options to select the right partnering strategy for you. Once you have your growth and partnering strategy in place, you can easily match your offering and your growth strategy to SAP’s partnering opportunities. This will dramatically reduce the effort of choosing and executing the right partnering strategy. To make a long story short, a quickfinder will provide quick access to the right strategy for your company and act as a guide in the SAP ecosystem.

Execute on the perfect partnering strategy

Fourth, with your game plan in place, you can start executing your partnership strategy to generate money. Tips and tricks from existing partners and cheat sheets make this book a valuable reference.

2. SAP in the software industry

SAP is a powerhouse in the software industry, with more than 355,000 customers in 180 countries and with most of the Fortune 1,000 companies using SAP software. This chapter analyzes the product mix in the software industry, the product mix provided by SAP and the product mix provided by SAP partners to SAP customers. It also examines different strategies and product mixes in different phases of SAP’s growth from a small German software company in 1972 to one of the world’s largest software companies today.

2.1 SAP’s relevance in the software business

To give you a better understanding of how relevant SAP is in both the global software industry and in the world economy, here is a list of some interesting key performance indicators (KPIs).

SAP company KPIs:

more than 87,000 employees worldwide in 2017

more than EUR 22 billion in revenues in 2016

SAP is the 4th largest software company worldwide (after Microsoft, Oracle and IBM).

SAP has acquired more than 50 software companies in its history – investing more than USD 20 billion in the last 5 years alone.

SAP is #1 for ERP and business software.

Software industry KPIs include:

SAP customers represent 100 percent of the top-scoring companies in the Dow Jones Sustainability World Index.

SAP customers represent 98 percent of the top 100 most valued brands in the world.

SAP customers represent 87 percent of Forbes Global 2,000 companies.

SAP provides solutions to 58 percent of United Nations member governments.

SAP Ariba is the world’s largest business-to-business network.

SAP connects more than 2.5 million companies in 191 countries on the Ariba Network.

80 percent of SAP customers are small to medium-sized businesses.

World economy KPIs:

SAP customers distribute more than 78 percent of the world’s food.

SAP customers distribute more than 76 percent of the world’s healthcare products.

74 percent of the world’s transaction revenue touches an SAP system.

SAP customers produce 70 percent of the world’s gold.

SAP customers produce more than 70 million barrels of oil each day.

SAP touches $16 trillion of consumer purchases around the world.

SAP global banking customers manage assets worth more than USD 70 trillion.

Figure 2: SAP ecosystem key performance indicators

Sources of SAP revenue by delivery model

In 2016, approximately 85 percent of SAP’s revenues were still delivered via on-premise solutions, but the company aims to see that number drop to 60 percent as its cloud offerings grow rapidly and continue to gain momentum.

Size of the SAP Channel

There are more than 15,000 SAP partners, accounting for 30 percent of the company's overall business. Half of major enterprise deals and 85 percent of new customers are influenced by channel partners.

However, only 7,000 partners are considered to be active: They generate at least one deal every quarter. SAP is dedicated to grow its partner ecosystem and plans to triple the size of the organization that manages the channel and helps partners by 2020.

Channel sales programs

SAP has several business and channel sales programs addressing partner cloud transformation, cloud sales accelerators and cloud services packaging. It is also launching a Partner Sales Academy to share best practices and train partners on how to use digital media and social networking to drive sales of SAP solutions.

SAP in the small-and-medium-sized business cloud

The company recorded impressive growth from its sales of SAP Hybris e-commerce software and SAP SuccessFactors HR software in SAP’s small and medium business (SMB) segment. For example, 6,000 of its SMB customers are using SuccessFactors. According to SAP, its cloud business has seen subscriptions increase by over 100%, while maintaining double-digit growth for on-premise software. A new referral program for partners is expected to drive this even higher. SAP lists 3,000 cloud partners, of which 2,100 are already certified.

2.2 Value chains in the software industry

Let us look at the software industry in more detail.

In general, the software industry provides the following products and services to corporate software users:

Supply the software (license or rent the software to companies)

Customize and implement the software (while consulting services for on premise are a must, less consulting may be needed for cloud software, which merely needs onboarding services to get customers up and running on cloud solutions)

Support the software, i.e. provide answers to customers’ product questions and help resolve problems

Maintain the software, i.e. provide software updates and bug fixes

Operate the software, i.e. run the software and/or grant access to software available in the cloud.

Product mix in the enterprise software industry

Figure 3 shows the sequence of these products and services in the market. A company in a software market must determine which of these products and services are part of its business model.

What seems like an easy choice is not. Choosing the right product mix at the right time for your company is crucial.

Figure 3: The software value chain

One choice is to be the only provider supplying, customizing and supporting on-premise software. This allows maximum customer lock-in and customer control, and maximizes the revenue from customers that a company making this choice can address. At the same time, the number of consultants available limits the growth of the company. This strategy makes sense for small software companies with very few customers or for software companies that differentiate by service, not by product.

For an on-premise software company differentiating by product and not by service, it makes a lot of sense to engage with consulting partners and delegate the customization and implementation of the software to these consulting partners or directly to the customers. For cloud solutions, onboarding is usually provided by the cloud software vendor. Customers may or may not be charged for such onboarding services.

Product mix, product differentiation and growth strategies

Software companies stand out by offering a specific product mix. Each company may have different growth strategies and choose corresponding product mixes.

Which products and services a software company offers can vary dramatically. You can get the best overview by looking at the software value chain in more detail. Figure 4 breaks this down by “layer” of software provided by software companies. The layers of software are business applications, software platforms and infrastructure. The third layer, infrastructure, covers computer hardware and network components that increasingly contain software or have large impact on the software running on the infrastructure.

The “Supply software” step in the value chain breaks down into supplying business applications, supplying platform software and supplying infrastructure. Each step subsequent step in the value chain is broken down in the same way.

Figure 4: The software value chain in detail

The product mix and partnering strategy of a software company is composed of the parts of the value chain that the software company provides and the parts that it has decided to delegate to partners.

Example

Let us have a look at a software-as-a-service (SaaS) company. It has chosen to offer all parts of the software value chain from supplying the software down to operating and supporting the software. It has also decided to provide the software via Internet access. In other words, how a company selects the parts of the value chain it covers is how it defines its product mix. Another SaaS company might choose to use Amazon Web Services to supply infrastructure and the platform. This frees up the SaaS company to focus on supplying the business applications.

SAP coverage of the software value chain

How does SAP cover the software value chain? SAP has spread its activities over all parts of the value chain as shown in Figure 5.

The step for supplying software is performed by the SAP development organization, which specifies, designs and builds the SAP solutions. SAP also uses software suppliers to provide solutions that are sold under the SAP brand. Partners extend the SAP solution portfolio by offering solutions that complement those of SAP to their customers, too.

Figure 5: SAP coverage of the software value chain

For on-premise software, the customize and implement step is covered by SAP Consulting, which is part of SAP’s Digital Business Organization. SAP Consulting is a global organization specializing in consulting related to SAP solutions and that has recently begun offering business consulting independent of SAP solutions.

Related to the SAP solutions, SAP Consulting offers services along the lifecycle of a SAP solution – from planning to configuring down to running customer-specific implementations of SAP solutions. The customizing and implementing steps are also covered by a large number of system integrator (SI) companies like Accenture, Cognizant or Tata Consulting Services.

By contrast, the customize and implement step for cloud software mainly consists of onboarding of customers. SAP handles onboarding itself.

In the case of on-premise and on-device solutions, the “operate business applications” step is carried out by the customers. They deploy the on-premise solutions in their data center or on their mobile devices.

For cloud solutions, the “operate business applications” step is covered by SAP’s cloud offerings like the SAP HANA Enterprise Cloud (HEC) or SAP Cloud platform. But SAP also offers other cloud solutions like SAP Ariba, SAP SuccessFactors and Concur.

The services SAP provides are listed below:

Application setup as well as application maintenance and change management for operating and changing SAP applications

Hosting services for cloud SAP applications and implementing and upgrading SAP cloud applications

Operating and maintaining SAP cloud solutions.

The support software step is covered by the Digital Business Services organization. SAP Digital Business Services offers the following services:

SAP Enterprise Support: SAP delivers support services for their customers based on defined processes and tools. Solution operation standards define processes to properly run SAP solutions. SAP Solution Manager is SAP’s support tool providing customers with application management and administration functions. It also contains access to SAP’s support queues. SAP Solution Manager is delivered with all methodologies, process definitions and any tools necessary to support SAP solutions.

SAP MaxAttention: This is a service package typically intended for large SAP customers needing dedicated and customized support services from SAP. It contains customized expert services provided by on-site SAP experts, dedicated technical account management and other services.

SAP Safeguarding: SAP offers specialized risk management services for identifying and mitigating risks in implementation and upgrade projects as well as optimizing application management to avoid risks.

SAP Consulting: As mentioned above, SAP Consulting offers services to businesses for optimization, migration and implementation of SAP systems and assists customers in the digital transformation of their businesses.

2.3 SAP’s history of growth

Over the years, SAP has gone through a number of growth phases that we will explain in this section.

SAP growth phase 1: Scale by delegating most of consulting services to partners

In the first growth phase, SAP was only selling on-premise Enterprise Resource Planning (ERP) Solutions to large companies. SAP owned a middleware technology stack and decided against selling the technology at that time. The technology stack was shipped to customers tightly bundled with the SAP applications running on it.

The solution complexity and customer success created immediate demand for consulting activities to implement the solutions. As a result, the growth of SAP was dependent on and limited by the number of consultants available.

From the very beginning, SAP delegated large shares of the SAP-related customizing and implementation services market to its consulting partners. Since SAP had many consulting partners, they could scale quickly to the growing consulting demand for SAP solutions. At the same time, the consulting partners were able to grow with the increasing SAP software business – even earning more consulting revenue than SAP was from selling their software.

SAP growth phase 2: Product differentiation and sales by industry

SAP started to differentiate its offering from generic, function-oriented on-premise applications to industry-specific applications.

It built industry solutions by reusing and building on the general functions of SAP’s Business Suite offering, blending it with industry-specific functions and best practices. It reorganized and refocused its sales organization to serve both target markets.

The sales and distribution model targeted on-premise installations and direct sales to medium to large-sized customers.

At that time, SAP regrouped industries into three industry clusters – manufacturing, financial and public services, and service – as follows:

Manufacturing

: covering aerospace & defense, automotive, chemicals, consumer products, engineering, construction & operations, high tech, industrial machinery & components, life sciences, mill products, mining and oil & gas.

Financial and public services:

covering banking, defense & security, healthcare, higher education & research, insurance and public sector.

Service:

covering media, professional services, retail, telecommunications, travel and logistics services, utilities and wholesale distribution.

This product differentiation allowed SAP to become competitive in many industries while reducing the cost to provide industry-specific solutions by reusing the core functionality of the SAP Business Suite.

SAP growth phase 3: Customer size differentiation and sales by size

The next growth opportunity for SAP was to differentiate between its customers by size, implementing sales, customer services and support by size of the customer company. Initially, it especially focused on the large customers.

Now, SAP has perfected its solutions for companies of all sizes, large, medium and small as shown in Figure 6. In addition, SAP offers services that specifically target certain customer sizes.

The solutions are characterized as follows:

SAP Business Suite:

This is SAP’s cash cow, a complete business management solution targeted at companies with 2,500 or more employees. It includes SAP ERP.

SAP Business All-in-One:

This solution is based on SAP ERP and is pre-configured using the SAP Best Practices.

It is sold by SAP and implemented by SAP or one of its experienced partners.

SAP Business One:

This business management solution targets small businesses.

SAP Business ByDesign (BBD):

This on-demand business solution is based on SAP NetWeaver. It is designed specifically for medium-sized companies that want to migrate to an integrated suite of business applications.

Figure 6: Market segmentation by customer size

Example

Let us have a look at a large company (10,000 employees). The company decided to run all its operations with SAP solutions installed on premise. As shown in Figure 6, SAP Business Suite is the right product for this company based on its size alone. The company might also want to have a closer look as to whether SAP offers an appropriate industry solution for the company’s industry.