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SAP partner program strives for long-term relationship with customers
In this Q&A, SAP chief partner officer Karl Fahrbach discusses why the company has evolved its partner program to reward customer success, rather than just focusing on sales.
The SAP partner program has undergone a transformation that the company believes makes it more relevant for today's business and technology environment.
Partners have played a significant role in building the SAP ecosystem by reselling SAP products, providing strategic consulting, system design, application integration and other services. In the on-premises world, partners' main focus was on selling and implementing SAP systems. However, as SAP's product portfolio has broadened and the cloud has become critical to SAP's future, the role of the SAP partner program is shifting away from sales to "customer success."
SAP still wants its partners to sell SAP products, but in the cloud-centric world, it is pushing them to also build successful applications for customers and to continue that relationship long after an implementation. The new partner model is needed to drive the intelligent enterprise, which SAP defines as an organization that uses next-generation technology to transform processes and business models.
In this Q&A, Karl Fahrbach, SAP chief partner officer, discusses the recent changes in the SAP partner program and its priorities going forward. In March, SAP's board of directors appointed Fahrbach as SAP's first chief partner officer, a role designed to formalize SAP's intentions to be a partner-focused company.
Why has the SAP partner program changed its focus from sales and implementation to 'customer success?'
Karl Fahrbach: The main model for the partners was implementation, but things have changed a lot in the past 10 years at SAP. We have acquired many companies and have a different vision. We don't just have one ERP product, we now have the intelligent enterprise with ERP at the core, and we have line-of-business solutions that we run on top of the SAP Cloud Platform.
All of this means that the opportunities for partners have changed. A study we did with IDC said the partner economy will double in the next five years from $100 billion to $200 billion because SAP offers a much bigger portfolio now … but we questioned if our partner program was ready to support that growth and change. So we have created a new, next generation partnering initiative that focuses on making sure that our partners have better access to innovation, a better experience and better economics to be profitable in this new reality.
What does the next generation partner initiative do differently than previous initiatives?
Fahrbach: We still have the PartnerEdge program, where we put the partners in boxes -- SIs [systems integrators], VARs [value-added resellers], ISVs [independent software vendors] or startups. But in this new next generation evolution, we're moving away from putting partners in boxes and looking more at the value that the partner adds to the customer. The new initiative looks at the customer lifecycle and the value that the partner adds in each of those steps. Before, we looked at partners from a sales cycle perspective, which helped us to sell and helped us implement what we sold, but then it stopped. Now in the cloud, the most relevant [key performance indicator] that we have is looking at customer success.
Will the next generation partner initiative help smaller partners that are often the leaders in innovation?
Fahrbach: If you look at yesterday's program, the best partner was the one that sold the most. Now we want to look not only at the quantity of the business, but the quality. One big change in the new partner program is that it will benefit the smaller firms. If you have a small boutique partner that does a fantastic job helping customers with fast adoption of SAP products, we want to reward it accordingly, even if it's not selling the products. In the past, this partner was maybe not as relevant for us because it wasn't selling, but now we're looking at different metrics.
How are you tracking these new metrics?
Fahrbach: We've changed the way that we get feedback from partners, and we've also established a partner advisory council, with everyone from the big SIs to small boutique partners. We're working on ways to provide a better partner experience and better access to innovation technologies.
Why did the SAP board create the role of chief partner officer, which is fairly unique in the software industry?
Fahrbach: The board considered the partner business as something that was going to be the innovation driver for SAP. If you look at SAP in the last 10 years, we have developed many innovative products. But when you look at the speed of innovation, we need to do something different to keep up with this pace without adding more developers. So we decided the key driver for innovation will be to work with partners. The board realized this and decided that we need to double down on the partner focus in the ecosystem. So they created the role of chief partner officer. It sends a very strong message to the market that we are a partner-led company, and we want the partners to be successful.
Will this new partner model continue given the changes in the SAP board and executive leadership this year?
Fahrbach: Yes, this will continue and the board is committed to the partner business. Both of the co-CEOs, Jennifer Morgan and Christian Klein, really care about the partner business and want to make sure that the partners contribute even more to the SAP business. Adaire Fox-Martin [head of SAP global customer operations], who I report to on the board, runs the partner business and the customer business, and she really cares as well about the partner business. Even though there have been changes, we see more commitment in the board for the partner business. It's good to change the mindset and that's something that needs to happen as well in SAP. Ten years ago we were direct, and would leverage the partners to implement systems or serve markets that were new for us or we couldn't really touch, like the SME segment. Now the partner business is where the partner will be always involved in creating value for the customer. That's the mindset that we're trying to shift to.