SAP to shift more users to resellers

SAP to shift more users to resellers

Looking to pump up sales of its software to mid-size companies while focusing its own sales force on larger users, SAP last week announced plans to hand off its US customers that have annual revenue of under $US500 million to an expanded reseller network.

Seven resellers currently handle sales to companies that have $200 million or less in revenue, while SAP sells directly to larger companies and their subsidiaries. But the vendor of enterprise resource planning (ERP) software and other applications said it will start relying more heavily on channel partners in the mid-market.

According to executives at SAP America in Pennsylvania, the new sales approach will take effect on January 1. SAP will gradually transfer existing customers with annual revenues below $500 million to the resellers, which will be certified to handle larger software implementations than they do now.

SAP said it also plans to sign up additional resellers for specific industries or geographic regions, with an emphasis on software developers that can offer their own packages along with its applications.

The changes will leave SAP's internal sales force free to deal with large customers and give it more time to sell the company's newer customer relationship management and supply-chain applications, said Allen Brault, senior vice president of SAP America's small and medium-size business unit.

In October, SAP lowered its sales projections and said it was accelerating cost-cutting plans, particularly in the US. But Brault said the sales restructuring wasn't prompted by the reduced forecast.

Key market for new sales

Like ERP rivals such as Oracle and California-based PeopleSoft, SAP is looking at medium-sized users as a key market for new sales. The under-$500 million category already accounts for 58 per cent of SAP's total software installations, the company said.

Even so, SAP hasn't been a big player thus far in the US mid-market, except among companies that are subsidiaries or affiliates of its top-tier users, said Joshua Greenbaum, an analyst at Enterprise Applications Consulting. SAP's resellers have been "a major weak point" in its strategy, he added.

But SAP has been working this year to beef up training programs for resellers, said Sharon Ward, an analyst at Hurwitz Group. Smaller customers should be able to get a high level of service under the new plan, Ward said.

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