SAP: It’s the best time to be a midmarket partner

“It is the best time to be SAP partner and the best time to be an SAP partner in midmarket as well as the best time to capitalize on all the innovations that we are bundling,” comments SAP’s Utkarsh Maheshwari.

Businesses continue to direct their investments towards GenAI use cases as they look to improve efficiency and productivity. According to a report by IDC, GenAI investments in the Asia Pacific region are projected to reach US$110 billion by 2028.

While AI has been widely acknowledged as business-critical today, only large enterprises are seemingly capable of making significant investments that can deliver the best outcomes for their GenAI use cases. In fact, most midmarket businesses – including both midsize and small enterprises – still find AI out of reach.

A recent SAP survey found that while AI is a top priority for these businesses, there is a gap between intention and actual use of AI. Bridging this gap is especially urgent for the SMBs in the region given that these businesses make up more than 90% of all enterprises in Asia Pacific.

The study of 12,003 businesses found APJ midmarket businesses, defined as companies with between 250 and 1,500 employees, with high revenue growth are more likely to put a moderate or strong priority on the adoption of GenAI (94%) than those with lower revenue growth (86%).

In a conversation with CRN Asia, Utkarsh Maheshwari, Chief Partner Officer and Head of MidMarket, Asia Pacific & Japan, at SAP believes there is still a lot of potential for AI in the midmarket. Utkarsh, who was just recently appointed Head of Midmarket for APJ, manages both business units for SAP APJ. Prior to this, Utkarsh was managing SAP’s partner ecosystem business.

“I spend a lot of time with midmarket customers all over Asia Pacific (APAC). Every market in APAC has a different level of expectation, maturity and investment from a government perspective. So naturally the landscape varies a little bit, but the good news is that 92% of the 3,400 customers we surveyed in a study told us that they would love to prioritize GenAI. This is very important because many customers face some very unique challenges operating in the markets that they are coming from. However, this result gives us complete boost of confidence that this topic is top of the mind for them,” said Utkarsh.

Utkarsh also mentioned that SAP’s Q3 results showed that 30% of their cloud orders included AI in some capacity, which was a big validation for SAP. Hence, he believes that AI is for all businesses including the midmarket business. Utkarsh also pointed out that SAP puts a lot of emphasis on their partners that focus on the midmarket to help them realize this vision.

The midmarket challenge

For Utkarsh, the biggest challenge is that any midmarket customer or any customer often struggles with data-related challenges. At SAP, the belief is that there is no AI without data. If the data is not accurate, not accessible and is not reliable, then the models that are built on top of that data are actually not going to deliver business value.

“On the face of it, this may sound like a problem that practically every customer in the industry is dealing with, right? For the midmarket customers, it is combined with the very limited technology investment, with some still operating out of legacy systems,” added Utkarsh.

SAP’s study revealed that 36% of the customers stating they are scared of making data decisions based on inaccurate data when they are devising their AI strategy. Another 31% revealed that they really feared the data quality and their ability to make decisions on those.

“The data, the fragmentation of the data, the accessibility, how it is captured? What is the foundation there? I think this is much more accentuated for a midmarket customer because in both my roles I see quite a variance between the large enterprise customers and the mid-market customers,” explained Utkarsh.

Utkarsh also highlighted that midmarket customers have a lot of data silos between their departments which is preventing them from having a bird's-eye view of even the basic data that resides in the organization. He believes the problem with data silo is a lot less for mature and large enterprise customers as they have the ability to deal with the larger SI implementation firms that bring a level of expertise that can manage this complexity.

“A midmarket customer has this silo and residency issue in disparate systems, and this makes it quite hard sometimes for them to be able to realize value straight out of the investments that they are making. Some of these problems are quite unique to the midmarket customers” said Utkarsh.

The role of partners

While there is demand for AI in the midmarket, the challenges in the industry can be complex for them. Fortunately, Utkarsh believes this is also an area whereby SAP and its partners can help the midmarket organizations in their AI journey.

“If you look at our partner ecosystem today, out of the 5,000 plus channel partners we have in APJ, not every partner is doing the same thing. You have strategic partners, managed services partners and reseller partners. The reseller partners are predominantly the partners that are servicing the midmarket part of the business,” mentioned Utkarsh.

According to Utkarsh, 87% of the world's GDP flows through an SAP system. This means that SAP customers generate 87% of the world's commerce and GDP today. Hence, he believes SAP has a unique and distinct advantage together with its partners to really bring business context to what is a classic data layer.

“This is why we are so passionate about the fact that we want to become the biggest AI company on the planet. We want to continue to realize this vision with our partners,” said Utkarsh.

At the same time, Utkarsh also highlighted that many of SAP partners have been very prescriptive around what a good clean core landscape looks like. They know that the customer needs to have a very stable digital core where the core of the business runs. Then through SAP's modular solutions, there are a lot of extensibilities that can actually be added on top of it.

“Our partners have truly embraced not only our Cloud ERP solutions such as RISE with SAP or GROW with SAP, but also Business Technology Platform (BTP) which is basically the gateway to integration extension and innovation that we put into the system as well,” he added.

For Utkarsh, this is where partners maintain a very key position in bringing the best of what SAP has in terms of innovation.

“Think of all the embedded AI use cases we have now. We have over a hundred use cases and 80% of the most commonly used cases are made GenAI compatible through our technologies. This is all available to our partners. On top of that, there is a customer success methodology. Hence, a midmarket business for SAP is completely predicated on our partners ability to deliver and help us realize this vision,” explained Utkarsh.

The right time to be an SAP Partner?

In terms of investment, Utkarsh pointed out that SAP makes a significant investment in the learning curriculum of partners, depending on the segments they operate. He explained that the learning curriculum is critical as 80% to 90% of SAP's implementations are all done by partners.

“We recently launched the Rise with SAP Validated Partner recognition. We believe it's not sufficient to only have certified consultants but certified consultants who are trained in BTP and other tools to be able to do that business process and redesign for the customer. We are taking certifications now and mapping it to what our customers need. We are coming up with a very prescriptive format for the own good of the partner as well as for the customers. So, there is naturally an increased focus in terms of the adoption,” said Utkarsh.

In Asia Pacific, Utkarsh commented that the Partner Maturity Framework is rolled out for all of SAP’s reseller partners. It sets the precedence on what is the partner’s ability in terms of doing the pre-sales effort, the solutioning on behalf of the customer, in terms of their proficiency, the capability to do the business cases, in terms of them being able to manage the post-sale as well as the implementation work around the cross sales and up sales value additions.

“The Partner Maturity Framework is something that we take very seriously in terms of continuously moving forward. We've taken the ultimate step now and given all the focus that we have put on our reselling efforts over the years, we feel that the time has come for SAP to take a step back and let our partners start priming our territories from a sales perspective. What I'm doing right now is carving out certain territories, which we call partner-led territories. I'm taking our sales reps from those territories, and we will let the partners run with those territories on our behalf,” explained Utkarsh.

He added that SAP is already executing this move in key markets like India, Australia and New Zealand, in Southeast Asia markets as well as in Japan and Korea. Utkarsh believes that this is the ultimate level of sophistication in terms of placing SAP’s trust and in terms of SAP partners servicing the needs of the midmarket customers. Going forward, Utkarsh highlights that this will be SAP’s strategy, and they will continue to reinforce this strategy year over year.

“This is the best time to be an SAP partner. We have one of the most profitable commercial models that we can offer to our partners. So, it is the best time to be SAP partner and the best time to be an SAP partner in midmarket as well as the best time to capitalize on all the innovations that we are bundling. It is also the best time to be a midmarket customer of SAP as well,” he concluded.