Late last year, ASUG sat down with John Scola, global vice president of cloud channels and strategy at SAP, and Beth Glasstetter, global vice president of partner ecosystem success at SAP to discuss some of the new updates to the SAP partner ecosystem. Specifically, we discussed the new SAP PartnerEdge Cloud, Flex Model and the new functionalities to the SAP PartnerFinder. Read our full conversation.
ASUG: Why don’t you start off by giving us a broad overview of SAP PartnerEdge?
John: SAP PartnerEdge is our partner program. We have ISVs, resellers and service partners all part of SAP PartnerEdge. Within that, we have these different partner types. I specifically focus on and work with resellers. We have the ability for our resellers to use a discount model, which is a very traditional kind of approach for partners who're buying from us and then charging their customers. Historically, it’s a very successful model.
Then, to support the evolving partner ecosystem, we came out with SAP PartnerEdge Cloud Choice. We released our first version, called SAP PartnerEdge Cloud Choice, Profit, back in 2016. In 2021, SAP has just updated this and has transformed the entire model, which we call SAP PartnerEdge Cloud Choice, Flex Model. This is a commission and revenue share model. It helps our partners drive their business in a very predictable fashion. They are guaranteed, essentially, a commission payment for the activities that they do for us. That boils down to managing the customer life cycle. They manage both the sales and the post-selling parts of the lifecycle. SAP gives our partners a commission payment and that is a fixed commission rate that they can always predictably receive over time.
That's different from reselling, where a partner would buy from SAP, and then they would make the margin in between whatever they buy it from us and whatever they charge their customer. That could be 1% or 30%.
ASUG: Thanks for the overview. Are there any aspects of this offering that you want to highlight more in-depth?
John: We broke the customer lifecycle management into two pieces. One is for selling and one is for post-selling. We could have a partner who does the selling piece and we compensate them for that. Then we could have a partner who does the post-selling piece and we compensate them for that. It's flexible in the sense that we can have one partner who does the selling and then another partner who does the post-sales piece based upon customer preference. It's highly flexible not only for our partners but also for our customers. The model in and of itself, in both fashions, is available in mid-market and it's for our partners who are selling in mid-market, the boundaries of which are somewhere around €1 billion in turnovers. We also are now opening this model up to large enterprises.
ASUG: Where did the SAP PartnerEdge Cloud Choice, Flex Model come from? Was this something partners have been asking for or something you all had been thinking about for some time?
John: We learned a tremendous amount over the last five years since rolling our SAP PartnerEdge Cloud Choice, Profit from our partners, SAP and our operations team on how to streamline our processes among other things. SAP PartnerEdge Cloud Choice, Flex is an evolution of SAP Cloud Choice, Profit, and it's based upon partner feedback, essentially, on how could we make it better for them.
One of the big enhancements was around how we pay partners. Now for a selling activity, once that sales activity is done, the contract is signed, and the customer pays us their very first invoice, we then pay out the commission payment on that selling activity. Essentially it's a one-time upfront payment and it's based on Total Contract Value (TCV). 10% of TCV is what we pay the partner. That helps them with their cash flow and to cover the investments that they made in the sales and marketing part of the selling cycle. That's very different than what we had with SAP PartnerEdge Cloud Choice, Profit, where they would get a recurring payment over time.
Now, the other aspect of it, which is what we heard from partner feedback is they also obviously want to be engaged with their customers and continue to get paid as a result of that customer engagement piece, which is super important for our customers in the cloud to make sure that they have someone who they could reach out to and who can support them in the sense of driving adoption, consumption, and usage of their solution, as well as helping that customer figure out where to go next.
For those activities, we now pay the partner 10% of Annual Contract Value (ACV). We pay that quarterly but think of it as an annual payment that the partner would receive for every year that they stay engaged with that customer. That was another piece that we heard from our partner and customers: how do we maintain that recurring revenue piece and continue to put money in their pocket and drive them to have that higher level of customer satisfaction and solution adoption?
ASUG: How does this most help your partners?
John: SAP PartnerEdge Cloud Choice, Flex Model helps our partners with their cash flow—that nice one-time payment on TCV. It helps them with their predictable earnings because it's a fixed percentage that they're going to earn for doing this activity. It also takes away all of the financial liabilities that you would have on a resell model. In a cloud world, SAP has a contract with the partner, and the partner has a contract with the customer. If it's a five-year deal, that partner is on the hook with SAP for five years to pay that cloud subscription revenue bill.
Let's say the customer defaults or goes bankrupt. We have ways to help support our partners when that happens. But at the end of the day, the partner is financially liable. When you have a commission-based model, all the financial liabilities between the partner and SAP are eliminated. The partner no longer has that massive financial risk that they do with a reselling model.
ASUG: Beth, let’s turn to you and the new SAP Partner Finder. Can you explain what this is?
Beth: What we have done is evolved the SAP Partner Finder to what is a more normal type of searching capability that customers would do. We want to help customers or even other partners find the best partners that they would partner with. It has a very open way of searching, and it’s aligned within our major product portfolio. It can also quickly dive into an area of the solution to focus on. The SAP Partner Finder is simple and has a clean, crisp interface. The other thing that we worked to do with the new SAP Partner Finder is to make all of the terminologies more traditional to align with what the customer would think of.
ASUG: How did you all collaborate with both customers and partners are you worked to improve the SAP Partner Finder?
Beth: We worked closely with a handful of partners, conducting interviews with the partner and some of their customers. We did 20 one-hour interviews with partners and their customers to better understand what customers are looking for. At the same time, we had the partner there helping us hear what their customers were looking for and how they were going through a decision process of identifying the right partners and what type of information they found useful.
ASUG: Is every single SAP partner on the SAP Partner Finder right now?
Beth: No. The partner does have to acknowledge and provide some basic profile information. It's a nice balance for us to make sure that they acknowledge the information, that they ensure that it's accurate and that they're committed to following through with customers because we want this to work for the customers. If the partners aren't acknowledging that and making that commitment, then neither the partner or the customer is satisfied, which we don't want.
ASUG: With this new update of SAP Partner Finder being released, what updates should customers and partners be looking forward to in the future?
Beth: The approach that we're taking is following more of an agile approach and we will be continuing to add additional enhancements. One of the things that we want to do is provide even further information on the partners using the data that we have on partners. This will, for example, help provide customers information on which solutions they have the certified consultants for? In time we'd like to provide more of that type of relevant information so that customers can understand important factors like if a partner has done experience in the types of industries that are important or that the customer is in. One of the things that we want to continue to do is expand more the functionality from SAP to also better address the different languages. So we'll be expanding to incorporate this working better to meet the customers in China, Japanese, Portuguese.