Cloud Business: The Fastest Growing Revenue Stream

Partners who sell SAP Cloud will generate more revenue, improve margin through their IP, and can differentiate their businesses through software development.

Cloud Computing

If you’re a smart IT solutions provider who makes data-based decisions about the direction of your business, here’s a fact you need to know. The fastest-growing revenue stream in partners’ businesses is reselling SAP Cloud software. Nearly half of SAP partners are seeing the most business growth from cloud, followed by integration services, reselling SAP services, and providing managed, consulting, and support services.

When IDC issued its research report on the SAP partner economy, analysts explained how much growth partners can expect. For every $1 of SAP software that partners sold in 2018, they generated $3.88 through additional solutions and services. Partners engaged in SAP cloud, however, generated $5.55 for every $1 of SAP software sold. By 2024, SAP partners selling cloud software will generate $6.48 per $1 of SAP software vs. $4.84 for those who don’t. Furthermore, 60 percent of net-new partner opportunities will be related to cloud. 1

The Revenue and Profit Potential of Your Own IP

IDC uncovered another compelling fact: Most of SAP partners’ revenue comes from their own intellectual property (IP). Reselling SAP products and services represents, on average, 45 percent of partner revenue, while 55 percent is derived from value-added services and the partner’s IP. The real pot of gold you’ll find when you develop your own IP, however, is higher margin. The unique solutions, services, and value-adds you create aren’t subject to negotiations with a partner, and you have more flexibility to set prices based on the value your clients perceive.2

The Fastest Growth Comes from Developing on SAP Cloud

As you build your cloud business and assist your clients with their digital transformation journeys, you’ll discover common objectives and pain points among your clients — and that solutions specific to their vertical market or type of business may not exist. Some SAP partners are responding to this demand by developing software on SAP Cloud.

The SAP-Qualified Partner-Packaged Solution Finder has nearly 1,000 examples of solutions that partners have developed to work with SAP software — and are now offered to other partners, which can drive even more revenue and growth.

For partners who develop on SAP cloud, the future looks bright. IDC analysts project that these partners will grow at a 23.4 percent CAGR through 2023, 2.3 times faster than other partners.1

A Mix of Offerings

A key takeaway from IDC research on the SAP partner economy is that cloud represents an opportunity for all partners, regardless of business model. Partners can resell SAP Cloud, add value with complementary solutions and services, and develop their own software.

Also, in the era of digital transformation, you will find businesses in different stages of digital maturity. On-premises solutions are still an opportunity, but cloud represents a much more significant growth potential.

A solid strategy is to offer a comprehensive selection of solutions that enable to you meet your clients where they are in their transition to the cloud while positioning yourself to take advantage of the opportunities that building a cloud business represents.

1 IDC Infographic, sponsored by SAP, Partner Opportunity in a Transforming World, 2019
2 IDC Webcast, Partner Opportunity in a Transforming World, 2019