Market awareness is SAP’s biggest SME challenge: partners

Published: December 9th, 2010

SANTA CLARA, CALIF. — German enterprise software vendor SAP AG (NYSE: SAP) isn’t an unknown brand to most in the business world. Indeed, SAP’s brand awareness is 25th in the world. But it’s not 25th in the small and medium-sized enterprise (SME) space, where potential customers see SAP as expensive, complicated and not for them.

Channel partners at SAP’s Influencer Summit this week identified SME brand awareness as the most pressing area where SAP needs to invest resources, ahead of other marketing efforts or partner enablement and support. And this priority was echoed by SAP channel executives.

Partners said they often have to spend time just getting in the doors of SME customers to convince them that SAP isn’t just a large enterprise player. Once they’re in the door, they’re very competitive, but too much time is still spent mythbusting.

Michael Pearson, president of Torono-based SAP partner Contax Inc., had to fly to Houston recently for a meeting with a potential customer to convince them SAP is an option for their mid-market business. They’ve now got their foot in the door and will compete with several other vendors for the business, but he’d rather be able to cut out that first step.

“The number one thing I’d like to see SAP focus on more is getting the message out that SAP is not just for big companies,” said Pearson. “I fight that battle every day. If there’s one thing we could use some help and support on, it’s exactly that.”

The concern is shared by Kevin Gilroy, SAP’s channel chief for North America. A channel veteran who held senior positions with Hewlett-Packard Co. and Arrow Enterprise Computing, Gilroy has been with SAP less than a year and said revamping marketing is a key priority for him.“We work on that every day,” said Gilroy.

The challenge is SAP’s marketing effort, while strong in the enterprise space, needs to be rethought and re-focused for the SME. He’s focusing on programs around demand generation, partner-led demand generation, spiffs, floor days and webinars.

“In the SME it’s about volume and scale,” said Gilroy.

While SAP’s SME marketing effort is a work and progress, Joel Martin, research director with London. Ont.-based Info-Tech Research Group, said SAP has a long way to go in marketing properly to the SME segment, which requires a very different approach and mindset than its enterprise cousins.

“I think I’ve yet to see SAP articulate a proper SME marketing program,” said Martin. “The video commercials look fancy, but they don’t talk well to the mid-market in the context of what their prospective customers are trying to achieve.”

Martin said the “real time, everywhere” SAP message doesn’t really translate well to what a 10 person company is trying to achieve in their business, and what they’re looking for from technology.

“Partners are really essential to winning those relationships,” said Martin, “The brand will be important, but it needs to be more in a mid-market context.”

Contax’s Pearson agrees the channel will be key to SAP’s success in the SME. He said partners, with SAP’s support, will need to be focused and verticalized; you can’t succeed as a generalist in the SME. Customers aren’t looking for a partner to sell them software. They’re looking for industry best practices they can apply to improve and grow their business, and they expect partners to know their business almost as well as they do.

“We’re very close to our customers, and we’re very much invested in their success. We’re a business partner for our customers, and we want to help them grow,” said Pearson. “No disrespect to SAP, but as a small company we can build the relationship that a company of SAP’s size and scale wouldn’t be able to develop.”

SAP does have big plans for the SME segment, and Gilroy said the channel will lead the way for the vendor in the space. He has mandated that all new SME business will be indirect, and exceptions must be approved by him. Thus far, he has only authorized three exceptions.

“We started our SME transformation 10 months ago and incrementalism is not in our vocabulary,” said Gilroy. “We’re focused on being predictable to our partners, and they’re absolutely key to our go to market strategy.”

SAP’s goal is to add 1000 indirect feet on the street in North America by January 2012, and Gilroy said they’ve already reached 500. He doesn’t want to do it by adding more partners – he’s happy with the partner base he has now – but rather he wants to get there by investing in existing partners and encouraging them to invest as well to grow their capacity and go deeper with the SAP portfolio.

Eyeing two-tier distribution

One way SAP may grow centricity is through two-tier distribution. The vendor currently moves its Crystal Reports offering through distribution, and John Wilkinson, SAP’s vice-president, business user, global SME, said they’re having discussions with key distributors around how they can expand their relationships.

“We do see two-tier distribution as the way for the future, and we’re exploring a few areas at the moment,” said Wilkinson.

With traditional high-volume distributors increasingly being squeezed on margin and looking to move up-market into more complex, value-added relationships, Wilkinson said distributors are also approaching SAP about going deeper.

“We’re looking at how we can release more complex offerings through that route to market,” said Wilkinson. “There are also tremendous logistics benefits from distribution that we may want to apply to our tier one relationships, without losing the intimacy.”

Follow Jeff Jedras on Twitter: @JeffJedrasCDN.


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