Karl Fahrbach became SAP’s first-ever chief partner officer in March of this year and is responsible for the company’s global partner business. In an interview, he discusses how, through next-generation partnering, SAP helps partners master the challenges that growth brings and why partnering with SAP pays off.

The cloud is the future – even for partners in the SAP ecosystem. A recent study by IDC estimates that over the next five years SAP partners will generate more than 60 percent of their new revenue with cloud-based offerings, and that overall SAP partner network revenue will double to almost US $200 billion. The fast growth means plenty of opportunities for partners.

Q: You’ve been in charge of SAP’s global partner business for four months now. How would you best describe your partner strategy?

A: It’s all about modernizing our company in a such a way that we can help our partners – over and above the sale, implementation, and operation of SAP applications – to become true innovation partners for their customers. And it’s about working together with our partners to help shape the Intelligent Enterprise. Obviously, we can’t deliver all the components for the Intelligent Enterprise ourselves; that’s why we need strong and competent partners by our side if we are to turn this vision into reality.

Are your long-standing partners ready, willing, and able to join you on that journey? Or do you have to look for new partners for that?

We’ve got a strong base of loyal partners that have in-depth know-how and extensive experience with our software. That’s a perfect starting point, of course. Our goal isn’t to radically transform the partner market, but to continue strategically expanding our range of offerings for our partner base in response to market changes. But we obviously do look for new partners that can help us turn our ideas into solutions as well.

Cloud Business Models on the Rise

What kinds of market changes, for example?

Cloud migration, of course, is the biggest change happening right now. More and more customers are switching to cloud-based solutions. At present, the share of cloud-based enterprise solutions is higher in the U.S. and Asia, but Europe is catching up quickly.

What’s more, the focus has moved from pure implementation of SAP applications to more customer-oriented innovations. That’s why we’re partnering with others to expand our own portfolio. This ultimately gives our customers an even wider range of custom-tailored solutions to choose from. And to support our partners in developing those solutions, we’ve put together an extensive line up of programs and initiatives.

How exactly does SAP support partners?

We start by offering them models that allow them to operate profitably and to flourish. This is part of a multi-year strategy that we call next-generation partnering.

SAP’s Partner Strategy

Can you be more precise?

In next-generation partnering, we focus on three areas.

Our first focus area, partner innovation, is about giving our partners faster and easier access to our platforms so that they can develop their own enhancements and components for the Intelligent Enterprise there. For instance, we give them free access to SAP Cloud Platform, which boasts more than 100 cloud solutions, to enable them to develop and enhance their own SAP solutions. There are already more than 1,800 such partner applications available on SAP App Center, our digital marketplace. In addition, partners get 12 months’ free access to test and demo environments on SAP S/4HANA Cloud and SAP C/4HANA.

The second focus area, partner economics, is about collaborating with partners to develop business models for profitable and sustained growth. After all, our partners are facing a changing business world too, so we work with them to help them adapt their business models. That doesn’t just apply to existing partners though. We also develop business models for new partners and make them lucrative offers for future collaboration.

Finally, in partner experience we focus on all issues relating to collaboration with partners. We’ve recognized the need for some improvement here and so we will continue to invest in the digitalization of our processes and systems for better transparency and improved collaboration. We also aim to involve our partners more, and ensure greater reliability and clarity of our future strategies and developments.

The majority of SAP partners come from the on-premise world. What’s their take on the shift to the cloud?

A lot of SAP partners have been working with us for many years. For them, moving to the cloud is a huge transformation process — we get that. That’s why we’re helping them every step along the way, ensuring we provide programs for topics that will be important going forward, so that they can take this journey with us. Targeted change management through coaching is one such example. That being said, the transition isn’t abrupt. The cloud is indeed the future, but our traditional on-premise business will continue to play a key role in our partners’ business for some time to come.

What about SAP customers, are they also transitioning to the cloud?

Definitely, though we still have a huge on-premise base here as well. For us, it’s always about giving the customer the infrastructure that suits them best. Every customer has their own requirements, and there are many different business models to choose from: from entirely on premise  to hybrid – in other words, a combination of local and cloud-based components – or cloud only. Together with our partners, we support all models and implementations.

How many partners does SAP work with worldwide?

We’ve got approximately 19,200 partners worldwide, including 1,300 partners in Germany. Together, they span the entire SAP ecosystem — from reselling our software to providing services, IT sales, and maintenance to developing specific applications such as industry or line-of-business solutions. More than 4,000 of our partners are cloud experts, and more than 1,000 have developed their own apps that are now available on SAP App Center. Since the end of April 2018 alone, we’ve added some 400 new partners to the ecosystem!

What arguments do you put forward when trying to win new partners or convince existing partners to join the digital economy?

We offer all SAP partners a trusted growth opportunity and reliable support, regardless of how long they’ve been working with us or whether they’ve joined the SAP partner ecosystem. We developed our partner strategy in collaboration with the market researchers at IDC. According to one of their recent studies, SAP’s total partner business today is worth around US $100 billion and is likely to double to US $200 billion by 2024. There’s only a handful of technology partners for which IT companies can expect such reliable growth. That’s another reason why we’re very optimistic that we’ll succeed in expanding our partner network.

This interview originally appeared on the German SAP News Center.