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That SAP decided to pay for customer leads was somewhat surprising to Steve Torres, vice president of business development at Axon Global, a technology consulting and systems integrator and an exclusive SAP partner.
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Which is why the referral program is open to a wide range of people and businesses playing in the software industry. "It was important that we start to build more voice out there, with more people that can, if you will, not necessarily sell SAP products but smell for small and medium-sized opportunities," Hume says. So the new partner program, enhanced with the referral fee, was aimed at raising SAP's profile among the previously ignored and untapped market. SMBs "tend to purchase from trusted advisers, people that they've been working with for years, who have helped them design and define their processes." The SMB arena is a "very local market," Hume says. To reach its lofty goals and penetrate the SMB market, SAP realized that it was going to have to expand existing partner relationships and create new ones that would eventually drive recommendations and business to SAP. Hume notes that 74 percent of SAP's customers fall into the small and midsize category (under $1 billion in annual revenues). SAP's entry into the lush SMB market is obviously one way in which to achieve its goals. In addition, SAP cofounder and legendary leader Hasso Plattner let it be known that he'd like to see SAP with 100 million users toiling away on SAP products.Īs of 2008, SAP has a total of 46,100 customers worldwide. One of SAP's often-stated goals is that, by 2010, it wants to have 100,000 customer organizations running its software. And now, she adds, SAP's goal is to "bust the myth that SAP is only for great, big companies." "Right or wrong, SAP has been for 35 years the leading industry supplier of ERP to large enterprises," Hume says. When asked if SMB companies are surprised by SAP's newfound attentions, Hume confirms that they are. This, after all, is the same company that made its bones implementing large, complex and expensive software rollouts almost exclusively to the Fortune 1000. Or its Business ByDesign on-demand software offering, which turns the traditional software licensing, installation and maintenance model on its head. "They're just hungry for it."Įvidence of just how much the times have changed can be seen in SAP's Business One ERP product line, which targets companies with 10 to 100 employees. "They all have the same goal: Make these applications easier to consume, less expensive, less complex, with more prebuilt tailoring for specific industries and processes," Wilson says. To achieve that, the vendors have overhauled their application offerings and marketing messages. Out of sheer economic necessity (there's only so many Coca-Colas and Wal-Marts to sell to), enterprise vendors such as Oracle, SAP, IBM and Microsoft have, in the last year or so, set their sites on conquering the SMB business application market. "What they're using is almost archaic systems compared to what you can do with SAP." Most companies are still using Excel spreadsheets", Wilson says of small and mid-market companies. "It's big, growing fast and it's relatively untapped. Once an afterthought of the giant software vendors, the midmarket area has suddenly become fertile hunting grounds. "And, boy, they're just going after the midmarket hammer and tong."
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The fees "are just another sign of the intensified competition that SAP and Oracle, in particular, are engaging in for the midmarket," says Wilson.
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" strategy is not in any way unique and certainly not a radical idea," says Warren Wilson, a research director at Ovum.īut SAP's offering of the fees is, nonetheless, telling. These customer bounties-also know as influence or partnership fees-are not anything new to the enterprise software industry.
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The "closing reward," as SAP terms it, is usually 5 percent of the deal's net software license value with a maximum amount of $50,000. Like other software vendor referral programs, such as Oracle's SMB plan called Accelerate, the reward is cash for those who generate leads eventually closed by SAP. "And the further down market you go, the more important it is to have the appropriate partnership to be able to capture marketshare." "In order to address the small and midsize market, it's essential that you have a 'go to market' model that is inclusive of channel partners," says Patricia Hume, SAP's senior vice president for channel sales and strategic alliances in the SMB sector.