Are You the Ideal Channel Partner for SAP’s Industry Cloud?
Author’s note – This blog post series is written for SAP’s channel partners and PE sell partners, but might be interesting for any partner considering building an industry cloud solution on SAP BTP.
In a previous blog post I talked about how SAP’s industry cloud is an important part of the new SAP solution strategy for the cloud. For channel partners, this means three business transformations should be considered:
- Not rely solely on core SAP, but also leverage SAP-developed industry cloud solutions.
- Leverage partner-developed industry cloud solutions, as SAP strategically has decided to not develop everything itself;
- Elevate your own Intellectual Property (IP) to SAP’s industry cloud solution to stay competitive and generate new revenue streams.
All channel partners need to consider the first two elements. In this blog post, I want to focus on the third one, by talking about what the characteristics are of an ideal channel partner to develop an SAP’s industry cloud solution.
Do you already have Standardized IP?
Public cloud solutions are basic standard solutions fitting the needs of multiple customers. Multiple customers use the same code and there is no exception or customization. This makes it easier and more cost efficient for customers to use the solution, and it makes it easier to maintain the solution for the partner. Thus, if a channel partner already has a standard solution used by multiple customers, this is a very good starting point for SAP’s industry cloud, even if the solution is a on premise solution. Sure, there is work to be done to technical change/transfer the solution to become real cloud service offering, and there is work to be done to make a commercial cloud service offering, but the basis is there.
If you do not have standardized IP already, then you must be fully committed to go in this direction.
Many partners I speak to do not have a standardized solution offering today, but they have great expertise in a certain (niche) industry and many of their customers use code the partner had delivered to them over time, but different variations of the code for different customers. Some of these partners have started work to review the IP they have installed at various customers with the objective to define one set of solution capabilities and then create one standard solution, obviously a cloud version.
Do you want to offer DevOps Services?
For me the biggest difference between on premise solutions and SAP’s industry cloud is the fact that a partner needs to move FROM shipping code TO running a solution. With SAP’s industry cloud, partners are responsible for running the solution in the cloud as a service. Obviously, SAP does a heavy lifting by running and operating the underlying SAP Business Technology Platform (SAP BTP) but the specific code/solution of the partner needs to be monitored and operated by the partner. This means that the partner needs to have staff monitoring the usage of the solution, how it performs, increase system resources if needed, deal with any issues related to the code, deploy patches and updates etc. In short, the partner needs to do ongoing development and operations (DevOps) work. As part of SAP BTP, there are tools to help partners execute on this.
What we want is to offer a complete software service. More and more customers say “I want SAP S/4HANA cloud and I need your industry solution, but I do not want to run anything myself. I want you guys to do this for me. I just want to use the system, not be involved in operating it. That is real cloud, right?”
Many channel partners already operate SAP-hosted systems for their customers and are familiar of being responsible for this type of activities. Delivering cloud services should be a natural evolution for these types of partners and obviously a new revenue stream opportunity.
Do you have your own access to the market?
As always, with an introduction of new offerings, it is important to get to a volume of customers relatively quickly to drive efficiency for the investments made and the ongoing costs. An important ongoing cost related to industry cloud solutions are the DevOps costs as previously discussed. The ideal channel partner for industry cloud already has access to customers and prospects. It can either be based on a long history of building a customer base and/or strong planned lead generation capabilities.
Also, co-innovating with customers by discussing their needs and creating solutions to address those needs is of course a great way to ensure you develop something which is really needed.
It should be standard for most channel partners to have access to customers and prospects, but I want to mention this specifically. Sure, SAP will promote partner solutions and SAP store can help drive demand, but a healthy baseline for a business plan is that the partner itself generate sufficient customers.
Longer term, leveraging other organizations to generate even more customers for the solution should considered, especially by reselling via other partners.
Are you open to resell via other partners?
Part of SAP’s industry cloud strategy is to leverage solution partners to build great officially approved industry solutions for SAP customers. SAP projects that 80% of industry cloud solutions made available to customers are built by partners.
While there are business opportunities for channel partners to sell their SAP’s industry cloud via SAP’s direct sales force, the big opportunity in my opinion is with other partners. Other partners typically target the same market segment in the same mid-market go-to-market approach.
SAP wants channel partners who create industry cloud solutions to make these solutions available for customers of other partners, especially because channel partners have a lot of knowledge about solutions needed in the mid-market.
Historically, many channel partners have been very protective of their IP for competitive reasons. They want to differentiate themselves from other SAP channel partners and consider their IP as crucial for this. However, more and more channel partners are changing their minds. In a sharing society where marketplaces, platforms, apps and partnering become more and more essential, and where multiple routes to market is a must for success, participating in sharing is probable the best long-term strategy.
I recently spoke with a channel partner about this topic. They developed a point of sales (POS) solution they used for their retail customers. They told me they had one competing channel partner for retail in their country. The partner concluded that they will not win all the retail deals in their country anyway, so they could better try to make some revenue of the retail customers of the other partner. So, they collaborated with the other partner and allowed them to resell their solution in some cases, reviewing each case carefully.
Channel partners like All for One Group, MTC, SPRO, FIS, Crave Infotech, retailsolution have realized this dynamic and are open to resell their solutions via other partners. Check out their industry cloud solutions and contact them if you are interested in leveraging their solutions for your customers.
I think the most important characteristics of the ideal channel partner for SAP’s industry cloud are more business management and strategy related, as can be seen with the four points discussed in this blog post. Of course, there are many technical aspects and tasks involved in building and commercializing an industry cloud solution, but I see this as an execution topic that I think all channel partners will master if they fulfill the four dimensions discussed in this blog post.
Even if you do not fit to all the four characteristics today, I hope this blog post can help you identify some aspect you need to pay extra attention to in making a plan how to move forward to become successful with SAP’s industry cloud.
Let me know in the comments to the blog post what you think about these four points, and if you see others!
Really enjoy reading your blog posts Finn. Nicely summarizes the essence of SAP's industry cloud market opportunity for channel partners!