SAP pursues midsize customers with partners

The ERP giant, in a bid to grow SMB market share, introduces a new scheme to encourage its own sales team to work with channel partners.

SINGAPORE--SAP is pulling out all the stops to capture a larger chunk of the midsize business market this year.

During an annual regional sales meeting here Wednesday, SAP Asia-Pacific President and CEO Hans-Peter Klaey drove home the message that the small and midsize business (SMB) space is important to the German ERP (enterprise resource planning) giant.

"There is no deal, no customer, too small to get my or our attention," Klaey said to a packed conference room, which included SAP staff, partners and the media. "The relationship model is very important in the large enterprise space. But the coverage model in the SME space is multichannel."

The business applications developer also announced its 2006 strategy to work with different types of partners, including systems integrators, distributors, VARS (value added resellers) and solutions partners to drive sales volume in the midmarket space.

Donna Troy, senior vice president for SAP's global SMB indirect channel, said this is the first time the software vendor is going to market with its partners to address the larger SMB accounts that typically have between 100 and 999 employees.

Troy explained: "In the past, we had a direct model for the large and midsize markets. Now, we're opening up the midsize opportunity to our partners. This allows us to have our sales people working with the partners."

"We couldn't go to the growth rates by ourselves," she added. SAP's midsize product, SAP All-in-One, is targeted at businesses that have between 100 and 999 employees. SAP Business One is targeted at small businesses typically defined as companies with between 11 and 99 employees.

To further drive their sales in this market segment, SAP has introduced a new "compensation-neutral" model to "encourage staff to work with partners", Troy said. The company's sales staff will receive similar incentives, regardless of whether a deal was closed directly or with the help of channel partners.

She added that SAP has also developed a structured channel operations policy to guide sales staff on how to engage with its partners.

The company's new hybrid sales model will result in its sales team having targeted accounts as well as territory accounts. "They will have quotas for both," Troy said. Territory accounts are led by partners, while targeted accounts allow SAP's internal sales team to engage partners in the sales cycle as they deem appropriate.

SAP will continue to rely on its partners to sell SAP Business One, she said.

According to Troy, SAP garnered a total of 16,800 new SMB customers worldwide last year, 7,700 of which bought SAP All-in-One and 9,100 were SAP Business One customers.

Pranay Mital, director for SME indirect channels for SAP Asia-Pacific, said his team has been given a target to sign on 18,000 customers in the Asia-Pacific region by 2010, 79 percent of which would be acquired by the channel partners.

According to Klaey, SAP's SMB business in the region gained strong momentum last year. "Our SME channel-based business has seen especially impressive growth with more than 1,100 new customers in 2005," he added.

Klaey revealed that the SMB market contributed more than 50 percent of total software revenues in the Asia-Pacific region last year. In the segment served by channel partners, the region saw a 50 percent year-on-year increase in new customer acquisition, he said.

According to SAP, its software revenues in the Asia-Pacific region (including Japan) increased by 25 percent to 363 million euro (US$435 million) for fiscal 2005 ended Dec. 31, 2005, over the previous year.