Life would be easier if SAP partners had crystal balls that show the way to sustainable growth. They’d know exactly what their clients are planning to do, how technology will advance, and where to invest time and resources.
We can’t offer you a crystal ball, but we can provide you with the next best thing—insight. IDC recently completed research on the SAP partner economy1 and the findings can help partners make smart decisions about how to set a course for their long-term development.
SAP Partner Economy Expected to Double by 2024
The IDC study indicates that the SAP partner economy will increase from about $100 billion in 2018 to more than $202 billion by 2024. To see proportional growth in your business2, Paul Edwards, director of Software Channels and Ecosystems at IDC, advised, “Go where the money is.”
IDC has found that’s in 3rd platform and innovation accelerators. Since 2007, Edwards said, businesses have demanded a platform of solutions — 3rd platform technology — including social, mobile, analytics, and cloud. IT spending growth in this area will continue at a CAGR of 5.7% over the next five years, and if you remove slow-growing mobile devices from that statistic, it’s closer to 14%. Spending on innovation accelerators, including IoT, AI, and next-gen security solutions, will grow at a CAGR of 17%.
“If you’re only focused on the 2nd platform, which has a slightly negative growth rate, you’ll need to take share from others like you in order to grow, which is a hard thing to do and is also not sustainable over the long term,” Edwards said.
IDC also evaluated the opportunity SAP partners have to assist their customers in digital transformation. IDC found that 52% of businesses are focused on operating model transformation, while 26% are focusing on omni-experiences and 19% on information transformation.3
Since the SAP portfolio delivers on all three of customer’s top priorities, this should be music to SAP partners’ ears. You provide what your customers will be looking for to advance their transformation goals in the coming years.
The Cloud Opportunity
IDC research revealed that 46% of partners are finding growth in reselling SAP cloud software.2 Mickey North Rizza, program vice president, Enterprise Applications for IDC, pointed out you can clearly see the advantage of selling SAP cloud by looking at multiples. For every $1 of SAP software, partners will drive $4.84, but for cloud software, it’s $6.48. Furthermore, partners who develop on SAP cloud are positioned to grow at a CAGR of 23.4% — about 2.3 times faster than other partners. IDC also estimates that cloud will represent 60% of partners’ net-new revenue.
Edwards pointed out that the SAP cloud growth opportunity is global, “so, no matter who you and your customers are, there’s a growth trajectory that’s worth going after.” He adds that cloud is a growth opportunity for all partner business models.
“Cloud is an opportunity you can’t ignore and will continue to be a bigger part of your business,” Edwards said. “Once again, you’re looking to follow the money in lockstep with where SAP is going.”
Opportunities Created by Digital Transformation
Along with opportunities related to SAP cloud, IDC found that partners are also experiencing growth in2:
- Partner integration services, 38%
- Resales of SAP services, 28%
- Partner managed services, 26%
- Partner consulting services, 25%
- Partner support services, 25%
Additional products and services most in-demand by SAP customers2:
- IT services, 61%
- Training and education, 59%
- Business services, 53%
- Cloud-based infrastructure, 44%
- Additional cloud applications, 34%
- On-premises infrastructure, 32%
The Value You Add
SAP partners are also finding that selling deeper and extending value into the accounts that you currently serve drives greater profit potential.
When I asked North Rizza what the call to action for SAP partners is, she said, “‘What are you doing still standing here?’ You should already be on the next journey. You should be on the digital path.”
“Revenue is about going forward. It’s taking what you’ve learned and the opportunity that SAP is bringing you at this point in time and capitalizing on it,” she stressed. “Are you setting yourself up for a short-range perspective or a long-range journey?”
1IDC Software Partner Survey, 2018 n=500
2IDC Infographic, sponsored by SAP, Partner Opportunity in a Transforming World, 2019
3IDC Webcast, Partner Opportunity in a Transforming World, 2019