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July 4, 2022
By Karl Fahrbach
Prior to 2020, many companies still relied on on-premises and legacy software platforms. The COVID-19 pandemic changed that. Over the last two years, cloud vendors and partners have been moving customers to the cloud at an accelerated pace. Thanks largely to this transition, IDC found that SAP partner revenue could expand from $141 billion in 2020 to $260 billion by 2024.
Before the mass movement to the cloud, partner success could be evaluated on input and output: partner sales and production. For partners supporting sales, implementation, installation and service of an on-premises solution, customer success could be evaluated within a one-time implementation and ROI was based on these discrete projects.
Beyond revenue and software co-creation opportunities, the rapid shift to the cloud has sparked the need to re-evaluate partner’s roles in the ecosystem and how to measure their success in the cloud.
With the shift to cloud, however, it’s more about evaluating the health of the ongoing customer/partner relationship – for example, the rate at which customers return to the partner for advice and additional projects. To ensure partners are delivering best-in-class projects and creating value for customers, the channel ecosystem has adapted how it measures success in the cloud.
In the cloud, there’s an ongoing – and growing – opportunity for partners to enhance the customer experience. For example, in the as-a-service model, an HR partner provides ongoing support for payroll software, which might include monthly or quarterly software updates, technical advice and ongoing integration with other HR software applications. In the cloud, partners have a continuous opportunity to accompany the customer along their entire cloud transformation journey, not just support a one-and-done implementation.
More broadly, most cloud implementation projects measure performance, security and cost on an ongoing basis. Companies consistently analyze benchmarks such as their uptime, utilization and latency with the intent of using those numbers to determine the overall success of their projects.
If a customer is successful in achieving their goals, and progresses against these benchmarks, that means the partner was successful in delivering a solution well-designed for the customer’s needs.
By delivering on a successful implementation and ongoing customer relationship, partners create opportunity for return business. If customers have great interactions with partners for one cloud project, they’ll continue to seek out that partner for future projects. When partners can successfully guide the customer through an implementation and offer strong after-sales services, there are then opportunities to identify new opportunities for partnership and it increases both the length and quality of the relationship. The cloud also provides partners with ample data they can leverage to create highly customizable and personalized services and solutions for clients, leading to a better customer experience.
The partner role has evolved to become more comprehensive to ensure customer lifetime value. In the on-premises world, partners were often just sought as implementers – identifying a software that fit a customer’s needs as closely as possible, off the shelf.
Partners can bring more value to their customer relationships by creating their own intellectual property (IP). When partners are encouraged to build and sell their own IP, they can create industry-specific solutions to their customer’s problems. Take, for example, a cloud ERP partner. A partner might create an industry solution in the retail industry, where there is a unique need beyond core ERP requirements. This leads to a higher level of engagement with the customer by highlighting a deeper understanding of their business needs. For the partner, this creates a profitable revenue stream and more loyalty from the customer to the partner.
Similarly, partners can leverage the ecosystem and collaborate with other partners to address customer demands. Should a partner specialize in one solution, through knowledge sharing with other partners they’re able to present customers with a complete package and an enhanced experience.
As the business landscape continues to transition to cloud-first, customer success will become the driving metric for partner success. By placing more of an emphasis on the customer-partner ongoing relationship and less on the partner’s input, partners can identify new opportunities for synergies that result in long-term customer lifetime value and growth. While traditional measurement can be useful and informative, the journey to becoming an intelligent enterprise is changing and it’s time our metrics do, too.
Karl Fahrbach is chief partner officer for SAP’s Partner Ecosystem Success organization, leading SAP business through an ecosystem of more than 22,000 partners worldwide. Under his leadership, SAP forged its Next-Generation Partnering movement in 2019, a multiyear transformation to improve partner experience and profitability. You may follow him on LinkedIn or @SAPPartners4U on Twitter.
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