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SAP intensifies midmarket partner push

Enterprise software maker unveils new channel program, through which it will admittedly try to steal partners away from closest rivals.

BOSTON--Business applications specialist SAP announced on Tuesday a new plan aimed at adding partners it can use to sell its software into the midmarket sector.

SAP, which classifies the midmarket as customers with fewer than 2,500 employees, made it clear at its ongoing Sapphire conference here that the new channel effort has two primary goals: getting larger numbers of qualified partners tied into its product lines, and taking some of those companies away from SAP's closest rivals in the business applications space. Among the rivals SAP is hoping to lure partners from is Oracle, which announced its own midmarket channel news on Monday.

Donna Troy, SAP's senior vice president of global small and medium business, said that the software maker launched the effort, dubbed the PartnerEdge Channel Partner Program, with hopes of rapidly increasing the company's market share in the small and midsize business, or SMB, sector. The executive said 30 percent of SAP's overall revenue is already generated from the midmarket but indicated that the company hopes that number will grow as it expects SMB companies to outspend their larger counterparts on enterprise software in 2005, the first time ever.

"We need to be where our customers want to buy, and just having the best technology is not going to be the answer in the midmarket," Troy said. "We need the partners that have local expertise and have local coverage, because that's who those SMB customers want to buy from, the trusted IT adviser, and that's who we want to carry our portfolio."

As part of the channel effort, SAP will award points to individual resellers and systems integrators based on how well they are performing as partners. The points will be given not only for the sheer volume of sales but also for the ability to effectively service customers, Troy said. SAP will then disperse market development funds, price breaks and marketing resources to various companies based on their ability to accrue those points.

Through the program, SAP will also offer a series of tools designed to help channel companies market its software, including an online collaboration system that catalogs information such as details on the software maker's industry-specific applications.

"We want to make sure that these partners make a lot of money with us," Troy said. "At the end of the day that's the name of the game; it's getting a business relationship with these partners that creates loyalty, ensures partners are making money consistently, and gives these partners great financial visibility and incentives to drive business with us."

Channel companies continue to have a greater impact in the midmarket for business applications than they may have in any other sector of the industry, according to some experts. As massive software vendors such as SAP and Oracle continue to push into the space, some industry watchers have predicted that bidding wars will materialize as partners test the waters with the companies to see which have the most attractive terms.

Forrester Research analyst Ray Wang said the midmarket has increasingly become the most strategic space for enterprise software makers as growth in the sector has begun outpacing sales to larger companies. The analyst said the biggest challenge for companies such as SAP and Oracle in moving further into the midmarket is in trying to deliver software to specific markets while keeping the price tag for such products at an attractive level for SMBs.

"SAP and Oracle really need partners to help them do this, and the strength and quality of those partnerships will be crucial to their prospects in the midmarket," Wang said. "This means the partners must be involved not only in selling the products but also in building additions to those applications."