Integrated enterprise applications vendor SAP has hit a snag using reseller channels to push its R/3 software suite into small to medium Australian companies.
One of its pioneering resellers, Sydney's Enterprise Solutions Partners (ESP), has dropped out of the program after a year of disappointing results. Its authorisation to sell SAP licences in NSW has been transferred to SAP's Queensland-based reseller, Data#3.
SAP hopes its R/3 reseller strategy will do for medium-sized ($200 million) Australian private sector customers what its direct sales efforts have done for the large enterprise market.
However, more than a year after SAP initiated its Australian reseller program, few licences have been sold by its two remaining resellers - Data#3 and Australian Solutions and People (ASAP) in Melbourne.
In Data#3's case, the lack of sales is not surprising - it's been a reseller for only four months.
But in ASAP's case, it has sold only two licences in the ten months it's been foraging for customers.
According to SAP's director of alliances, Sanjay Gupta: "We are still overcoming perceptions that SAP software is only suitable for large organisations."
In no hurry
ASAP managing director Peter Boyd notes an "irrational fear" among smaller companies about the realities of implementing R/3.
"It takes time to get early adopters to have the confidence to give us a try, get them live and let them spread the word in the market," Boyd said.
One hurdle is R/3's eight to nine months sales cycle among small to medium scale enterprises - about the same as their larger corporate cousins take to finalise a sale.
Despite low licence sales, ASAP turned over a comfortable $3.1 million when revenues from R/3-associated services and other product licence fees were added in, Boyd said.
But included in that was completion of six implementations based on customer contracts previously signed by SAP.
"Working on an average licence fee sale of $250,000, if we do six licences per year once we build momentum, that will be a pretty good business for us when service and maintenance revenues are counted."
Five to six annual licence sales are also what Data#3 managing director John Grant estimates are needed to underpin a viable long-term SAP reseller role for his company.
Data#3 is picking up "a large number" of ESP staff and is in the process of hiring other employees.
It will run the Sydney office from its Brisbane headquarters until next year.