The vendor’s Canadian channel chief insists the investment is to support customers, and all net new deals will flow through the channel

Among SAP‘s (NYSE: SAP) priorities in the small and medium-sized enterprise (SME) space for 2009 is increasing its focus on inside sales in terms of capacity and scale, but the vendor’s Canadian channel chief says this won’t be competitive to the ERP vendor’s Canadian channel partners.

In a media briefing from SAP’s annual Sapphire user conference in Orlando, Jeff Stiles, SAP’s senior vice-president of SME marketing characterized SAP’s go-to-market model in the SME as a hybrid one.

In 2009, Stiles said a key focus for SAP will be working to increase its inside sales organization, believing that bringing in people from the field will help reduce the vendor’s cost of sale as well as allow it to provide more assistance to the channel.

Stiles said though that, in addition to working with partners, this larger inside sales team will also be engaged in direct selling of SAP’s SME solutions.

“It’s absolutely a combination of both,” said Stiles. “They won’t be doing lead generation, but they’ll be actively engaged with current customers and very much focused on helping the selling process. The focus is really co-selling.”

In Canada, however, the channel needn’t be concerned said Conrad Mandala, SAP Canada’s vice-president of SME channels. North of the border, the inside sales team will be fully integrated with the demand generation organizations to service partners, and he doesn’t foresee any conflict.

“Our intent is to have the inside sales organization drive revenue through the partner channel,” said Mandala. “They’ll be calling to the install base to do renewals, and some of those could be existing direct accounts. But any net new customers will be going through the channel.”

Paul Edwards, director of SMB and channels research with IDC Canada, said the greater assistance for partners in the sales process will lead to improved speed of sale, adding partners shouldn’t be worried about conflict with a beefed-up inside sales team.

“I think partners should look at the inside sales team as being a resource to help them build their business,” said Edwards. “If you look at the growth of the channel business within SAP I don’t think you’re going to hear partners complain. There’s a lot of business.”

Another focus for 2009 will be channel recruitment. The vendor currently has 4250 worldwide channel partners, split evenly between SAP and former Business Objects partners. In Canada, the partner base has grown to 30 partners. One newcomer is Optimal Solutions Integration, a Texas-based services partner with operations in Canada that intends to grow-out its SAP business in the Canadian market.

In North America, last year SAP drove 37 per cent of its SME revenue through the channel. The goal for this year was 50 per cent, and currently they’re at 49 per cent. Given the nature of the Canadian market, Mandala said the numbers here are a little higher. The Canadian goal for this year is 65 per cent, and Mandala said they’re on pace to exceed that mark.

To support this channel growth, Stiles said SAP is extending its business partner and referral program, which offers lead registration and allows partners with complementary skills to work together on opportunities.

It has also launched a global channel marketing impact initiative that’s focused on teaching partners how to market themselves. In addition to education sessions, it includes a marketing collateral component with standard campaigns partners can customize with their own logos and verbage. The Fast Start program, an online solution evaluation tool that helps drive prospects to partners, is also growing.

Finally, Stiles said more focus is being placed on cross-selling opportunities between SAP and Business Objects partners, helping each get trained on the other as well as facilitating joint selling opportunities between partners with complementary skills.

Mandala said in Canada that cross-selling is already happening. The partner organizations have been integrated, all SAP ERP Gold partners have been certified on Business Objects, and partners have seen success going back to their SAP install base to have a conversation about Business Objects.

He added while customers are thinking longer before pulling the trigger on an SAP implementation or major upgrade, their pipeline is “bigger than its ever been” and interest remains strong.

“Many large and medium projects are going through increased scrutiny, with customers wisely making more careful decisions about investing,” said Mandala. “When things are economically difficult, smart companies are taking the opportunity today to invest in infrastructure so when the economy turns they’ll be stronger and more able to capture the market opportunity that will confront them. It’s a very exciting time for us.”

Overall, IDC Canada’s Edwards said he believes SAP is on the right track trying to build more of a volume-model to go to the SME market through the channel, and taking the best of what Business Objects, which had a more mature partner organization, was doing on the channel side.

“They’re making a concentrated effort to reduce their cost of sale, and that means getting their partners to be more self-sufficient and be able to deliver efficiently across the product-line,” said Edwards. “It really is the right direction for SAP to be able to deliver on the capacity within the SME market.”

Many of the initiatives, such as marketing assistance and customized campaigns, aren’t exactly new ideas to the channel. But Edwards said it shows SAP is absolutely more committed to the SME market as a big opportunity, and evolving its partner strategy around the understanding they need to take steps to make the cost of sale lower.

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