>> Voiceover: The Cube, covering SAPPHIRE NOW.
Headlines sponsored by SAP HANA Cloud,
the leader in platform as a service.
With support from Console, Inc., the cloud internet company.
Now, here are your hosts, John Furrier and Peter Burris.
>> Okay, welcome back.
We are here live in Orlando winding down day two of three
days of wall-to-wall coverage,
of live coverage of SAPPHIRE NOW.
This is The Cube, SiliconANGLE's flagship program.
We go out to the events and extract
and sift through the noise.
I want to give a shout-out to our sponsors who
allow us to get here and do all this massive programming,
SAP HANA Cloud platform, Console, Inc., Capgemini, and EMC.
Thanks to our sponsors, we really appreciate it.
Our next guest is Roger Quinlan,
Senior Vice-President, global head
of the partner-managed cloud at SAP
Thanks for joining us, welcome to The Cube.
>> Thanks for having me, this is great.
>> We love it, so explain what is the partner,
partner managed cloud, just to kind of make sure
we get the definition out there
because you get the partner ecosystem,
but this is the managed cloud, the partner managed cloud.
>> Right. >> John: Explain what that is.
>> So basically it allows, it allows our partners
to create cloud offerings, private cloud offerings
that they can offer to their clients
as software as a service.
And obviously SAP technology enables
the inside of that, the guts of it.
And we typically structure the agreements in, you know,
anywhere from two to seven year.
Most of them are five year agreements
so it's a long-term agreement, good for the partners,
helps our clients get into the cloud quickly and easily.
>> Explain who those partners are and give an example
of how that works because SAP, you had partners,
many, many years delivering the apps.
But now this platform game
with the cloud changes the business models.
Who are some of the people that are implementing this?
>> Yes, so Capgemini is a great example of one,
NTT, Accenture, you know the players
that you might think of right there.
And there's even some smaller ones, some smaller SIs
that are maybe not household names
but are doing very good work.
>> Specialty boutique kind of, domain expertise.
>> Yeah, and even some that are fairly large
but are not maybe household names in the US
but are big names in Europe, like T-Systems as an example.
>> Great, and the vision around this was just to get
simplified on the delivery cycle,
so with cloud, the goodness of SAP now can be tailored
for the end client 'cause these guys are smart,
they have data scientists,
they have a lot of programming capabilities,
they have a cloud knowledge.
But they have to deliver a solution to the customers
'cause they are a trusted advisor to your customers.
Is that the main reason?
What's the push behind all this?
>> Yeah, their main reason for us is really to allow us
to get into market niches that we don't serve today.
So if you think, I'll give you a great example.
There was a niche with hospitals,
smaller hospitals in southern Africa.
And they needed infrastructure
to manage the operations of a hospital.
They wanted to modernize.
They wanted to do the digital transformation,
to use the modern buzz-word.
And so one of our partners had a very good relationship
with a couple of these hospitals and went out and said,
hey, you know, if we built a solution, would you use it?
And they said sure, so they went out and built it,
and you know they started off with one, two,
by the time they had it all built they had three.
Quickly, they had seven.
They're now up to 16 hospitals.
It allows us to provide great technology to these hospitals.
They can provide better healthcare to their constituents
in a market that we otherwise would not be able to serve.
So that's one good example of accessing a market
that maybe SAP would not have access to.
But the integrator, which was T-Systems in this case,
that, you know, has great relationships in that community,
so it really is leveraging a relationship they already have.
>> So I can see the benefits to the customers
and the partners 'cause it's clear.
Partners can make more money, can have
great differentiation to their customers.
What's the impact of the SAP sales force?
Do they get comped on it?
Is there a channel conflict?
Because that's going to probably come up.
>> It's funny, so you know our market space
well enough to know if that's an issue now, right?
And it always is, right?
So what we've decided to do is,
basically the sales organization that has the end customer,
they get, basically they get compensated on it.
>> So they're incented to play ball.
>> Absolutely, there's no disincentive.
It's kind of the same if they sold it directly themselves.
>> How does the partner managed cloud support
the new S/4HANA 'cause that's the big story here.
You're talking about ERP, modernized up.
It's a big, all the discussions around that,
everyone's jazzed up about it.
All the hardcore SAP customers are all like, okay, wow.
How does that impact this?
>> Yeah, so S/4 becomes the technology that
most of our partner-managed cloud offerings are utilizing.
So what we find a lot is customers out there want,
they want to do something new.
Maybe they're a Hybris customer today,
or they're an Ariba customer today,
but now they need to modernize their core.
They need to do an ERP.
Maybe they didn't have one, or maybe they had
an old one and they want to modernize it.
S/4 is a perfect way to go deliver that
in the cloud to the end client.
And so I would say you know maybe a third or 40%
of the transactions that we're doin'
in the partner-managed cloud space are S/4.
>> A lot of your partners, especially some of these big guys,
are trying to evolve their business models away from ours--
>> Roger: Yes.
>> To IP, so I presume a big part of this
is to try to get them to build that IP,
proximate to the SAP platform.
>> Roger: Yes
>> How are you encouraging them to do that?
Are you underwriting?
Are you financing it in any way?
Are you sharing it?
How are you getting them,
other than just the raw business opportunity,
what kind of new business models
are you putting in place so the value
accretes to your platform from these guys faster?
>> Yeah, we're really focusing on verticals
and on geographies, so that we don't have overlap.
That way it creates a unique differentiator
for that particular systems integrator.
I talked about the example in southern Africa,
but another example would be in
Japan in the real estate market.
We did a similar thing with a totally different
systems integrator, and that allows them to have
a unique approach to the real estate market
inside of, primarily inside of Tokyo.
So what we try and do is try and make sure
that we don't have a lot of overlap
in geographies and overlap in solution areas,
so they get some sort of a competitive advantage
and get some runway to run with this for awhile.
>> And at what point in time do you find yourself,
John asked the question about at least channel conflict
with your sales guys but the goal is to have the entire
ecosystem work really well together
without being encumbered with enormous transaction costs
of how these different parts come together.
At what point in time does SAP start
to have a direct relationship with some of these folks?
For example, are you taking responsibility
for sending down updates?
Are you working to bring new extended
or extending the ecosystem into a customer?
Or is all that going through the
partners that you're working with.
>> So I'll answer that in a couple of different ways.
So first of all the primary relationship
is really between the partner and the end-client.
It is their kind of SaaS offering to the client.
We provide the technology underneath.
So that's one way we do it.
The other part of it that kind of keeps this close to SAP
is the backend, the maintenance and support.
Level one, Level two is still handled by
the partner, but we handle level three.
So there's still a relationship, when they get stuck
and things go wrong or something needs to be fixed,
we end up getting involved.
But the primary support happens between, with the partner
and most of them are very well skilled
at being able to handle that level of support.
>> But are you also then bringing your ecosystem
and your set of partners to them as well?
>> Absolutely, yeah, so it's not just the SI world right?
So some of these partners really want to be in this game,
but they don't have hosting capabilities
so we'll do Azure or we'll bring in AWS,
and that's a mechanism that's
already in a good place for us.
>> Well and also, they have a multi-vendor view anyways
so they're going to broker the different
clouds and intercloud them together.
I think, to your point there, I think it's worth
double-down on because that was important.
Virtustream came out of that concept,
so when Virtustream was sold to EMC for billions of dollars,
a billion dollars, that ultimately filled the same gap
that you guys are doing with this program.
They essentially did SAP Cloud and did some tooling up.
Now, you're offering, essentially, SAP tech to everybody.
Okay, that's cool, so that's just for the folks out there
just want to make sure they catch it
'cause that's how big it is in my opinion.
>> Can I follow up with one quick point though, John?
So let's say the extension, the partner
extension programs that you guys have
that allow your sales force to sell third-party software
from the SAP ecosystem into customers.
If a large customer, or if a large partner
is a partner of yours and you're standing them up,
are they also able to piggyback in those arrangements
and start bringing, or do they all have to have
separate business arrangements
with everybody in the ecosystem,
or is there kind of a master agreement
that you're bringing to bear
so that everybody plays better together
because you're kind of overriding the whole thing?
>> Yeah, so we like to make this as easy as possible,
so we take into the 4,000 items
or whatever on our price list,
we enable that through this partner managed cloud,
that way they don't have to go get
individual agreements if they want to,
maybe they want to do OpenText or something like that.
>> So you're bringing the whole portfolio to their cloud?
>> Roger: Yes.
>> Tell how the IoT, how this plays in
'cause that's a real sexy market everybody's going after.
We heard that's going to be on the second-half of the year.
You mentioned some things around that.
That's a big focus and a lot of people are using the,
I say hype cycle now, which it's legitimate hype,
but the apps are coming on a couple of years down the road
so the architecture's going on now
so people are setting the table for IoT today.
Does that fit into this?
>> Absolutely, it does, and you heard a little bit about
when you talked to Mark right before I came on.
He talked a lot about the platform, on a cloud platform
that his group is responsible for
and really that becomes a leverage point.
So on a cloud platform can be a part of this,
and oftentimes they want to do the enablement
on top of that kind of cloud platform
because they want to be able to extend.
The great part about S/4 is that it's standard,
and it's industry specific, and it's simple to operate.
But that also means that some
companies have a lot of customizations
that need to be part of their solution to their end-clients.
And so how do you do that?
You do that with HANA cloud platform,
and sometimes that becomes an IoT play as well.
>> Yeah, that enable them to at least have some headroom.
>> Yes.
>> (laughs) Future proofing, whatever term they want to use.
Okay, tell about the vision of digital
transformation because this really becomes
an interesting business model question.
How does a digital transformation vision
that SAP as a company is going down
relate specifically to your area, and how does that relate
to the business model of the customers?
What are you guys doing?
Is there any kind of new things?
Is it an incentive comp, obviously the sales
gets comped but options to the customer?
Where's the margins?
Is it a discounted sliding scale?
All of these are the questions that are
popping through my head right now.
I'm the partner, what's in it for me?
I got to make some cash so--
>> Yeah, so what's in it for the partner is
they get a long-term relationship with the end-client,
and oftentimes they bring a relationship
with that client already, and now they're extending it,
and it's a very sticky relationship
because when you start on an SAP program,
that's not something you switch in
and out every couple of years.
So that's one of the benefits to the partner.
And I will say the part about digital transformation,
everyone wants to transform their business.
Not everyone is able to, but most companies want to do that.
This becomes the digital core, right?
You use S/4 as the digital core,
and you can get into it quickly.
And if it's an industry based solution
that this partner is now providing to multiple clients,
they can implement it quicker.
>> They can standardize on it.
>> Yeah, they can standardize on it,
and then they can do hospital one, hospital two,
all the way to hospital 16 a lot quicker, right?
One or two maybe take you some time,
but by the time you get to the 16th or 17th,
it's going really fast, so it enables a faster time
to market for the end-client, and you know
that digital is all about speed.
>> Yeah, if they're building Lego blocks,
and they build their own, they cast it out
and they build more of them and just ship them out.
>> You mentioned another item.
You know there are some customers
that have been using SAP Solutions for a long time,
and maybe they're not using all of them any more
or maybe they've gone off maintenance, that's a topic.
We've been able to use this tool
as a way to bring the customers back.
So maybe they ran ERP way back when it was release four
or 4.5 back, you know, back in the 90's.
They got away from it for whatever reason,
but now they're really excited about S/4
and they want to come back.
This is a mechanism to allow us to do it and do it quickly.
>> And also they get basically rebooted
or reset on the new platform.
>> Yep.
>> But also you get net new customers out of this.
>> Absolutely.
>> So it's not like you're recycling the same SAP customers,
certainly the churn might be helped a little bit.
Now, that's the thing that I'm going
to look at is those new customers,
and I think they're going to be attracted
to things like the Apple announcements.
How does that impact you?
Are you affected by that?
Certainly the glowing afterglow
of the announcement will be good.
>> It's pretty cool, isn't it?
>> John: But does it directly affect your business?
>> It will absolutely affect it
because the whole concept about that agreement
is to develop applications that enhance the user experience
and to the extent that we can leverage
all of that better user experience,
in a faster time to market, get to the cloud quicker,
that's all good news for the end client.
>> We're finally going to have a remote desktop on
the phones that actually works, seamlessly.
>> Yeah, real rendering, as opposed to shadow rendering.
>> All right, final question, what's your take
on SAP this year, thoughts share with
the audience who couldn't make it.
They might be watching this live or on-demand.
What's 2016 SAPPHIRE NOW all about?
>> Well 2016 SAPPHIRE NOW, in a lot of the keynotes,
was really about kind of exposing a more, you know,
a more honest, a more upfront conversation.
We saw it in they keynotes.
You know, Bill McDermott, our CEO, put his e-mail address
out on a keynote with 30,000 people in the crowd
and then you know a 100,000 or so watching, right?
That's a pretty bold thing to do.
And so I think you're trying to see, you're seeing SAP
trying to become more human, trying to have more empathy.
You know, we're a big company.
We do some very cool things.
We run a serious business, right?
But being able to do that in a very human way
is what I'm seeing here on the show floor.
>> Final question, final, final question
'cause that was the second final question,
what KPIs are you going to look at on the scoreboard
to benchmark your success where
you say, hey, we hit a grand slam?
You know, is it the number of partners?
What are the simple metrics that give you an indicator
that you're winning, you're achieving your objectives?
What are some of the things you look at
to kind of get a feel for if it's working or not?
>> Yeah, I want to see multi-client agreements
that we put together where they have more than one client,
where we've established what the multi-client agreement
is going to be and we actually are executing against that.
That's one.
Two, I want to see customers going live
and getting productive results out of it.
And revenue growth is obviously always something we watch,
but that's kind of tertiary to the first two.
And if we do the first two,
the partners are going to be successful.
They'll get sticky with their clients.
The clients will be happy because they get a faster time
to market and that's how this grows.
>> So it's really who stands up what solutions
is really going to be the benchmark.
>> And focus on, it is all new markets for us I think.
>> John: Roger Quinlan, thanks
so much for coming on The Cube.
Really appreciate the insight.
You got a big job, exciting.
I think it's going to be a greenfield opportunity
with your existing clients in a new way,
a new business model innovation, congratulations.
>> Great, thanks for having me.
>> Okay, we're in The Cube here.
You're watching day two coverage
of SiliconANGLE Media's The Cube.
I'm John Furrie with Peter Burris.
Thanks for watching.
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