Summit Insights: Packaged Solutions Strategy

Prolonged sales cycles have frustrated SAP and its partners for years, said Steffen Burger, global vice president, SAP Partner Solution Center. Too much time, too many lost deals.

“Competition is tough out there. We want to take more partner share, but needed to change the way we evaluate and communicate to prospects,” Burger said.

Packaged solutions offer a fixed price, fixed scope, improved responsiveness and increased visibility and transparency, accelerating a prospect’s response time and decision-making process, Burger said.

“It needs to be very predictable and the sales cycle must create trust from the first touch,” he said. “How can we respond quickly within hours, max one day, to customer demands? The only way is a pre-defined scope, a customer-facing sales process with immediate response.”

Evolving a partner business from project-based to packaged solutions isn’t done overnight, notes John Scola, SAP global vice president of cloud channels and strategy.

Moving from a model that closes a small handful of deals in a year to one that needs to close dozens of deals during that same time to retain profitability requires a shift in demand generation, sales processes and marketing, Scola said.

“Packaged solutions bring predictability, transparency, affordability, accelerated time to value. A pre-defined scope helps you drive repeatability, makes you more efficient,” Scola said, adding that partners successfully selling packaged solutions can double their margins compared to traditional on-premise, project-based solutions.

Keep Communication Lines Open

Packaged solutions are especially enticing to net new customers that previously may not have considered SAP as a viable option because of price or implementation concerns, Scola said. He cited BMW as an example, noting that the famed German car maker launched its 1 and 2 series of cars, significantly expanding its addressable market.

“As you become more efficient, you can lower your price point and be attractive to a lot of new customers,” he said. “You also drive up the valuation of your business, making you more attractive to banks and private equity. Overall, you become more valuable to the market.”

Packaged solutions offered by subscription have the added benefit of forcing the partner into regular communication with the customer, building trust and a rapport that is likely to strengthen the relationship, Scola said.

“You can’t do an implementation and call a year later asking if they want to renew. You have to drive quick time to value. We know if customers are going to renew within the first 90 days of engagement, because if you haven’t delivered value in that first 90 days, renewal rates drop in half,” Scola told the audience of partners.

Packaged solutions also offer partners a foot in the door, opening opportunities for more—and bigger—business down the road, Scola said. “We do a lot of analytics on our deals and in cloud, the third deal is the biggest deal. You don’t want to sell them everything on the first deal. Sell what they need at that moment in time,” he said. “Demonstrate value, then go in and sell another. Once you’ve proven value to customers and gained loyalty, the third deal becomes a much larger deal.”

Partner Perspective: Transparency is Key

Gordon Laverock, managing partner, U.S., for Presence of IT, a Global SuccessFactors Gold partner, agreed with Scola’s assertion, noting that the approach has been successful for his company selling packaged solutions for the last several years.

“The first module gets us in front of new names, gets projects going. The sales team focuses on getting the first solution in, then the customer engagement rep goes in and talks more modules and develops a roadmap for the customer, which gets you into bigger deals,” Laverock said.

Laverock told the audience that Presence of IT leadership recognized several years ago that the company needed to evolve away from traditional project-based revenue toward packaged solutions that customers increasingly found appealing.

Presence of IT realized success by being prescriptive and promoting packaged solutions pricing right on its website — contradicting conventional wisdom to keep pricing quiet, he said.

“We were telling the market how much it costs, how long to implement. If you drill that in, building a statement of work, the sales process starts accelerating,” Laverock said.

Why? Standard pricing, scope of work and implementations become self-marketing collateral, Laverock said. Customers are more informed than ever, knowing what they want and with a pre-conceived set of expectations. Packaged solutions help set expectations from the get-go, eliminating drawn-out negotiations and decision making, he said.

“We developed a Cloud Project Portal and that has all the methodology, schedule, plans, testing and all project details. This provides transparency for the customer and lowers the hands-on project management,” Laverock said. “No longer do I have to put someone onsite for five days a week.”

Presence of IT has now implemented more than 500 SAP SuccessFactors modules globally, refining the process a little more each time to maximize value to customers and profitability for the partner, Laverock said.

“It’s increased our pipeline significantly, but our ability to convert pipeline is also better. When we started in cloud, we’d close one in five or six deals. Now we’re doing one in every two or three,” Laverock said.

SAP Qualified Solutions Bring Benefits

SAP’s packaged solutions focus will only increase in the near future, especially as more partners qualify their solutions under SAP’s qualified partner-packaged solutions framework, which establishes SAP-endorsed branding around solutions that meet specific criteria.

Burger explained four primary benefits of qualifying a partner-packaged solution with SAP:

  • Ability to use a special SAP-branded logo
  • Increased external visibility on SAP.com
  • Increased internal visibility with SAP’s GPO sales teams
  • Alignment to the digital sales motion of SAP Commercial Sales

“This is clearly a strategic focus for us and will only increase as we all move toward cloud. A fast response is even more relevant now,” Burger said. “Packaged solutions provide an optimal customer-facing approach with a strong go-to-market process.”

This article first appeared on LinkedIn.

Scott is a senior IT channel communications specialist at CommCentric Solutions, a Tampa-based communications specialist focused on technology channels and ecosystems consisting of major developers, distributors and solution providers worldwide. The agency rigorously follows and shares insights and guidance about channel trends, news and conferences, including through innovative digital vehicles, press/analyst relations, comprehensive research reports, case studies and industry speaking engagements.