By Karl Fahrbach

Karl Fahrbach

The COVID-19 pandemic drove a shift in customer expectations that we haven’t seen before. In response, direct-to consumer businesses had to redefine their offerings. This naturally cascaded down the supply chain, including manufacturers and software service providers. It’s clear that the pandemic created a need to change, but also an opportunity for partners in the enterprise application space.

Thanks to an accelerated shift in managing business processes in the cloud, partners now have additional avenues to expand their business models. Rather than purely focusing on the sale and implementation of enterprise software, partners also have the opportunity to develop and deliver their own innovation. Yet, enterprise application vendors need to provide support to partners seeking to innovate within the ecosystem. They need to help enable a creative environment via knowledge sharing, design workshops or incubator programs. Working together, partners and enterprise application vendors can offer portfolio completeness, providing customers with a complete package to drive success.

There’s been no better time for partners to develop their own intellectual property. Customers are demanding innovative solutions to help them navigate the new normal, and the cloud provides greater opportunity to act with speed and agility. Below, I’ll dive deeper into the role of partners in innovation, the economic opportunity for partners, and how partner innovation acts as catalyst for customer innovation.

The Evolution of Partner Roles

Customer success and partner success are interconnected. If a customer is successful in achieving its goals, that means the partner was successful in delivering a solution tailored to the customer’s unique business needs. Partner innovation can be a key component of customer success, but it often also requires a change in mindset from seeing partners as extensions of a software vendor’s business to seeing them as individual entities that work alongside the vendor to create business value.

Partners have advanced beyond single-capability roles and are being increasingly valued by companies to amplify their capabilities across multiple parts of the value chain. When vendors are transparent with their partners in the development and release of their own intellectual property, partners can innovate on top of standard out of the box solutions and cater them to specific industries or business processes based on their unique knowledge. Ultimately, when partners join in on the innovation process, it creates a win-win-win situation where enterprise application vendors, their partners and customers all win by creating an empowered partner ecosystem that drives customer success.

The Profitability of Partner Innovation

When partners are treated as co-creators, they can reap economic benefits. As partners actively build and sell IP, they differentiate themselves in the market and create new, consistent revenue streams. For example, the solutions the partners create might have originally been developed with a specific customer in mind but can now be adopted by another customer with a similar business need.

Partner innovation benefits both the innovating partners and the connecting software vendor, as it enables them to work together to drive customer success. The key ingredients in fostering innovation and driving value are a holistic, human-centered approach, combined with a multidisciplinary team, as well as a creative environment. By incorporating these cornerstones in establishing partner-centric sales and service, companies can drive sustained partner growth and create a higher level of engagement with customers. In turn, this will increase customer satisfaction and create lifetime value.

How Partner Innovation Spurs Customer Innovation

Partners aren’t the only ones who benefit from their innovation. With the goal of customer success in mind, partner innovation can deliver flexibility and agility to customers. For example, companies that are transforming their HR processes are looking for software solutions that fulfil a unique set of requirements, but that yet still empower its leaders to make changes in an agile manner to maintain competitiveness in the talent market. With customers avoiding customization, partners have a unique opportunity to fulfil the customer’s need for tailored and scalable cloud solutions. The partner can create a packaged solution jointly with the software vendor that proves to be both long lasting and adaptable, addressing unique business or industry needs. The customer saves money and time in avoiding customization projects and furthermore is armed with the knowledge that the software can support their processes as their business continues scale over time.

With solutions catered to their business, customers have the data and knowledge they need to address unique business issues. Additionally, the time they previously spent addressing the complexities of customizations can now be spent on advancing their business strategy.

Partner innovation isn’t just a new revenue source — it’s an opportunity for accelerated and sustainable growth. For enterprise application vendors, their partners and customers to all reap the benefits, we must reimagine the partner ecosystem and ensure that partners are supported and mentored throughout their journey. When partners are empowered to innovate and commercialize with speed, they’ll find themselves rewarded in more ways than one.

Karl Fahrbach is chief partner officer at SAP, where he leads the channel organization that supports partners through digital transformation and transition to the cloud. You may follow him on LinkedIn or @SAP on Twitter.