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Salesforce, SAP Execs: Solution Providers Can Make More Money In SaaS By Building Their Own IP

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Channel partners can exponentially boost their gross margins by building business applications that sit on top of CRM or ERP platforms, according to executives from SAP and Salesforce.

SAP has told its solution providers for 18 to 24 months that they can improve gross margins from 15 percent to 70 percent by moving from product resale to the creation of technical or services-focused intellectual property (IP), according to John Scola, global vice president of cloud channels and transformation. The margins for IP also exceed those associated with implementation-related services.

“Partners might have their own IP and not even know it,” Scola said during a panel conversation Monday at CompTIA ChannelCon in Austin, Texas. “We just need to show them there is a way.”

Salesforce has worked closely with systems integration giants like Accenture and Deloitte, who have built offerings focused on insurance, health care and patient relationship management on top of the customer relationship management platform, according to Sherrick Murdoff, vice president of partner investments.

The arrangement is repeatable and maintainable for Accenture and Deloitte, Murdoff said, since Salesforce is responsible for upkeep of all of the technology below the business application.

“It’s a much bigger market for them,” Murdoff said during the panel. “It allows them to provide that IP, that industry-specific know-how to the market. It’s a very good value.”

In the SAP ecosystem, Scola said South African solution provider Allos has built a technical engine and business consulting services capability that plugs into the Walldorf, Germany-based vendor’s Human Resources platform. SAP’s platform and Allos’s solution are combined into a single package, Scola said, and can be procured by customers under a fixed per-user, per-month financial model.

Solution providers looking to get into IP creation should move away from looking at each customer project as its own individual, discrete set of tasks, Scola said. Instead, Scola said channel partners should look for ways to bundle implementations or others components of their business as repeatable tasks without a long scoping exercise, and then sell it as a package.

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