Software maker SAP is expecting much from its channel in the next 18 months.

The ERP (enterprise resource planning) company expects to make the channel its primary route to market as it charges full-force into the small and midsized enterprise space and looks to beat competitors to the 92.3 percent of the market it regards as open to an ERP solution.

Under a redesigned go-to-market strategy with the SME, SAP is relying on its partners to both extend its reach into the segmented marketplace and make its All-in-One and Business One applications relevant to customers in micro-vertical industries, where business process functionality will be the products’ differentiator, SAP executives and partners said.

To enable the strategy, SAP launched a hybrid direct-indirect channel program whereby direct sales resources will be responsible for channel success under a single organization and account executives will be compensated equally regardless of the chosen channel.

The company also announced 14 new or improved channel tools and programs, including the full deployment of its PartnerEdge structure, to reward and manage a growing partner roster.

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The company is also taking steps to ensure that the 94 account executives in its SME unit take advantage of partners—including a multimillion dollar compensation program for channel sales and tools—and programs and leverage channel solutions and resellers when needed, executives said.

“This is a huge shift for SAP,” said Donna Troy, director of global indirect channels at SAP. “The market segment of large versus small and medium-sized enterprises required a coverage model focused on SMEs, with partners as its cornerstone.

“Moving to a hybrid strategy will give us better coverage and opportunity in places we could never reach … [They] are our sales force.”

Under the channel model, ISV communities will build micro-vertical solutions for All-in-One and add-on solutions for Business One to make industry specific business process knowledge the product’s differentiator.

VARs will push the product through the market, aided by SAP’s in-house sales organizations.

SAP also raised the ceiling on accounts available for partners from businesses with under $200 million in revenue to those under $1.5 billion.

“SAP has opened the door for partners in the SME to a whole new host of opportunities,” said John Haddad, Managing Director of Small and Medium Enterprise at IDS Scheer, a business process management firm and All-in-One ISV.

“They are allowing us to engage in accounts we never would have had access to, with account executives that brings more value to our prospects than just reselling the product.”

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