When it comes to software-as-a-service (SaaS) applications aimed specifically at business operations there are basically three faces of SAP. The first is the enterprise class SAP Business 4 offering running on the SAP HANA in-memory computing platform for which the company is best known. At the other end of the spectrum is SAP Business One, a suite of applications aimed at the needs of small businesses. In the middle is SAP ByDesign, which provides a full range of functions aimed at the midmarket that in terms of actual adoption has had a rocky history.

Despite that history, however, Dr. Michael Schmitt, senior vice president and general manager for SAP Business ByDesign, maintains it is this SAP ByDesign midmarket opportunity that will eventually prove to be most profitable opportunity for SAP channel partners.

In terms of sales alignment, SAP’s direct reach into traditional enterprise IT organizations is both fairly broad and deep. That doesn’t mean there isn’t room for channel partners in the enterprise, but it does mean SAP is trying to drive as many of those customers as possible in cloud application service is manages. In terms of acquiring new customers, SAP is mainly looking to the midmarket.

While the overall SAP channel program has improved substantially over the years, the application software behemoth still struggles with engaging the channel. In the wake of the departure of SAP channel chief Kevin Gilroy, the company is in the middle of extended overhaul of its channel program as part of an effort to make it simpler to do business with in an era where channel partner designations are increasingly meaningless.

But while the channel program is evolving, Schmitt said the product segmentation strategy in the cloud is pretty much set. To that end, Schmitt said partners should expect to see more clarity from SAP in terms of sales alignment along with a concerted effort to expand the SAP ByDesign ecosystem. That critical for SAP because while uptake of its cloud offerings is on the rise thanks mainly due to acquisitions, most existing SAP ERP customers are expected to make an extended transition to running SAP Business 4 applications running in the cloud. In fact, given the volume of application software running on premise today, the opportunity to drive cloud revenue higher is probably better in the small business and midmarket segment than it is among traditional enterprise IT organizations that tend to favor private clouds.

Naturally, when it comes to cloud applications for the midmarket competition is fierce. Given how much SAP has riding on the midmarket, it would appear however that SAP is indeed willing to make the investments needed to make sure SAP ByDesign can not only effectively compete at the product level, but just as importantly in terms of developing meaningful SAP ByDesign relationships in the channel.