As it shepherds its 20,000 on-prem corporate customers into the cloud, SAP is also preparing for a “massive expansion of our volume business” starting in 2025 as it pushes more mid-market sales and innovation opportunities to its ecosystem partners, according to CEO Christian Klein.
The operating model shift is important for a few reasons:
- It underscores SAP’s growing presence among mid-sized and even small businesses;
- At a time when every Cloud Wars Top 10 vendor is extremely focused on expanding its partners ecosystem, SAP is giving its partners a huge revenue opportunity;
- It reveals Klein’s unflinching commitment to maintaining a growth rate that is much higher than those of its primary rivals (3X faster than Salesforce, 2X faster than Oracle’s SaaS business, 50% faster than Workday and Microsoft Dynamics 365); and
- It reflects the rapid transition to digital marketing and rapid deployment solutions that are creating stunningly rapid “time to value” timelines for customers.
On SAP’s Q3 earnings call last week, CEO Klein described SAP’s intentions to dramatically expand its focus on the mid-market in 2025.
“Starting in January, you’re going to see the massive expansion of our volume business, starting with marketing on the digital, connecting this to territories which are partner-owned and then fully automated — no human touches,” Klein said.
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“I mean, this is something what we never had at this scale and of course, we are also then expecting the partners to invest more into SAP, which they all signal they will do. There’s a very great momentum in the ecosystem because we don’t want to go too deep with our direct sales team into this mid-market territories anymore.”
So what we’re seeing from Klein is his commitment that SAP will now itself deploy for the mid-market the same type of benefits SAP promises its applications can deliver: more automation, faster operations, more digital capability, less friction, and better outcomes. This might seem “obvious” but it’s in fact the result of decades of work from across the entire enterprise-tech industry, which has longed dreamed of being able to shorten implementation times, reduce the pain and cost imposed on customers, and accelerate innovation for customers.
Of course, SAP is not the only company moving in this direction — but Klein is the first CEO in the Cloud Wars Top 10 to spell out in detail how and when his company will deliver those high-value results. And don’t forget: right now, SAP is the clear market leader in enterprise applications — think about those growth rates noted above — and is taking steps to ensure it retains that position.
Klein then went on to describe how SAP is simplifying the way it takes its products to market so that customers can more easily see, evaluate, and buy related or contiguous products and solutions.
“In addition, we will change a little bit the line of business setup we are having today where we have separate sales motions for Finance and for Spend — instead, let’s combine that,” Klein said. “Let’s also have the cross-sell incentives and the cross-enablement in place to really harvest that we have thousands of employees serving our customers.”
In that way, Klein said, SAP can simplify the process for customers by connecting adjacent SAP sales teams offering related products, which conceptually will make it easier for those customers to understand the potential benefits of each module within SAP’s Cloud ERP Suite.
Final Thoughts
Within the next couple of quarters, SAP will reclaim from Salesforce the title of the world’s largest enterprise applications provider. Right now Salesforce is slightly ahead, but SAP’s much higher growth rates will soon drive it back to the #1 spot.
Christian Klein is actively engineering a new and very different SAP to ensure that as the needs and requirements and expectations of customers change here in the world of AI-powered digital business, SAP will be able to move as fast as those customers move — while also moving at least a little bit faster than its competitors.
