A Summary of Some of the Pitfalls of Software Partnerships with SAP
Last Updated on April 19, 2023 by Shaun Snapp
- The reality of the SAP Partnership Program is far different than what is usually presented.
- The SAP Consulting partners act as arms of SAP, rig software selections, and help with SAP account control.
Video Introduction: SAP Partnership Program
Text Introduction (Skip if You Watched the Video)
SAP has the most extensive vendor partnership program of any software vendor worldwide. This Program presents the following characteristics to SAP customers and the outside world. SAP has enormous control over its partners, and the arrangement is anti-competitive and corrupt. Once in a partnership with SAP, SAP has approval over the partner’s marketing, often restricting any language that would make a vendor partner from being competitive with an SAP product. You will learn how SAP has weaponized its partnership program against partners.
Lack of Financial Bias Notice: We have no financial ties to SAP or any other entity mentioned in this article.
Lack of Financial Bias Notice: We have no financial ties to SAP or any other entity mentioned in this article.
How SAP Presents Its Partnership Program
- A Collaborative Affair?: SAP presents this partner network to customers as a highly collaborative affair.
- A Vibrant Vendor Ecosystem?: The partnership program is used as evidence that SAP has a vendor ecosystem and allows other software vendors to participate in this ecosystem for mutual benefit.
- How Many Partners? : SAP often talks up how many vendor partners it has without revealing much about how the vendor partner program works.
- Partner’s Freedom of Expression?: Not a single word is uttered regarding what happens to the partner vendors’ rights of expression.
- A Pro-Competitive Tool? : Appearances to the contrary, SAP uses the vendor partner program as an anti-competitive tool, something for which it is close to impossible to find published material.
- One Big Happy Family? : Vendor partners talk up the SAP vendor program to prospects and do not critique it publicly or to customers or prospects. In private, they often bitterly condemn SAP as a partner.
How the SAP Consulting Model Works
SAP developed the first highly integrated consulting firm partnership model in the enterprise software market. Since the beginning of enterprise software, most software vendors have implemented their software with their consulting, and SAP does the opposite. Since it became a popular software vendor in the 1980s, SAP outsourced its consulting to other firms. SAP did not do this because they thought these consulting companies could implement the software better; they believed they could implement it faster or felt it was better for their customers. SAP knew that if they gave consulting companies their consulting revenue, the consulting firms would recommend their software.
Profit Based Recommendations
SAP’s consulting partners recommend SAP regardless of the fit between the SAP application and the business requirements or the capabilities of the competitive applications. Consulting companies never point out that their recommendation of SAP applications is entirely based on their quotas. Consulting companies can only meet their quotas by recommending SAP (as they have an SAP practice) or Oracle (as they have an Oracle practice).
How Consulting Firms Rig Software Selections in Favor of SAP
SAP consulting partners go through the motions of looking into other software vendors (which they also bill the client for) but always tilt the playing field in favor of SAP or Oracle. Therefore SAP consulting companies mislead their clients when they propose that the software selection be open and fair.
Serving as Message Repeaters
SAP’s consulting partners repeat whatever SAP marketing states without questioning whether or not it is true. Whether SAP’s Run Simple Program or SAP’s Netweaver program – which never actually existed or SAP HANA, consulting companies have demonstrated a history of repeating things that SAP marketing says are wrong.
Excusing Overspending and SAP Implementation Failures
SAP’s consulting partners excuse SAP software problems and help SAP to place any blame for failed implementations onto the buyer or customer. SAP has a specific method for blaming the client for project failures, as is covered in The Art of Blaming the Client for Implementation Failures. These articles excusing failure are published in media entities that take money from SAP.
For example, SAP will always exaggerate what its software can do, how quickly it implements, how sophisticated it is, and how many places the software it is running. You can see my article on SAP’s brazen exaggerations of customer numbers for S/4HANA on that particular topic.
And their consulting partners, which are mainly consulting arms of SAP, both do not contradict SAP but most frequently add their lies on top of SAP’s lies. Many members of IT organizations owe their allegiance to SAP over the companies they work for. Their current employer only being their temporary employer. This leads to the question of whether IT decision-makers should sign a fiduciary agreement to put their employer’s interests above the interests of their favored vendor.
The SAP Gold Partner Designation
SAP certification is for companies that have a software or hardware product. However, many consulting companies are SAP partners, although they don’t have to undergo certification as they have no “product.” But SAP consulting partners face the same limitations to their marketing and advisory messages regarding SAP as soon as they become SAP partners. SAP has different levels of partners. For instance, an SAP Gold Partner is very high in the hierarchy. Being an SAP Gold Partner supposedly means meeting a higher standard, having more company members pass certification tests, etc.
However, I have worked with SAP Gold Partners that never have to pass any certifications because they are connected to SAP through personal relationships at high levels. Furthermore, SAP Gold Partners are utterly unqualified in small market countries, but SAP has another reason for wanting that company to have the designation. In some small market companies, there are not very many choices.
How SAP Abuses its Control Over the ERP System
Customers that first purchased SAP never had any idea they were giving this power over to SAP. Something no one predicted when ERP systems first began to be sold in the 1980s is how some software vendors would use the sale of the ERP system as a form of account control, directly purchasing into often low-value “accessory applications.” And no one drives their customers to buy more of its applications based upon the power of the ERP system than SAP.
Many SAP partner has contacted me and told me stories of how SAP threatens to take their partnership away if they don’t follow the SAP partner rules. And they explain precisely how the control by SAP works.
Interestingly, almost all initial arguments used to sell ERP systems were untrue. The misleading information about ERP systems provided by SAP, Gartner, and SAP’s consulting partners in the book The Real Story Behind ERP: Separating Fiction from Reality.
Does SAP Rein in its Bad Consulting Implementation Partners?
SAP has given awards to consulting companies like WiPro that are known to be horrible for customers. This problem is covered in the following quotation from the book SAP Nation 2.0.
“SAP has a tendency to write code and then hand it over to its partners. It fails to think enough about customer deployment issues. Worse, it lets customers fend for themselves in dealing with its partners. Many SAP customers have not done well negotiating with or monitoring hardware vendors, hosting firms, telco carriers, offshore application management vendors etc.
In fact, it has been suggested that unlike Ford, for SAP, “Partners are Job #1.” Partner interests, it would appear, trump those of its customers. The sum total of partners’ inefficiencies explain much of the excess in the SAP economy.”
The Case Study of the Teradata and SAP Partnership
After years of partnership, Teradata filed a lawsuit against SAP, accusing SAP of anti-competitive tactics and IP theft. We analyzed this lawsuit in the article How True is SAP’s Motion to Dismiss Teradata’s Complaint.
But let us review both SAP and Teradata.
Both monopolistic commercial vendors have captured public domain IP and spun it as if they invented everything they own. SAP and Teradata were involved in a partnership for the express purpose of extending their monopoly power. These partnership agreements should be illegal, as they form an anti-competitive barrier in the marketplace. Teradata is complaining about SAP’s anti-competitive behavior, but Teradata supports SAP’s hegemonic position by partnering with them.
These partnership arrangements are, by their nature, corrupt. And SAP has 14,000+ of them. Why are these partnerships between entities necessary?
The consulting space produces large quantities of false information as the consulting companies become little more than bobbleheads and parroting whatever SAP says.
The Reality of SAP Partnerships for the Software Vendor
Salespeople in vendors that compete with SAP should know, and often do know, that even if your company is a partner with SAP, that only counts for something as long as SAP sees it in its best interests to keep a civil relationship. SAP does not like other software vendors and usually is looking for a way to compete in their area, and that means partnerships with SAP often tend to be amicable only over short periods. And our service applies to every software vendor that competes with SAP, whether they partner with SAP or not.
SAP is well-known for preventing customers from buying applications from SAP partners’ software vendors. Therefore, we describe the dynamic of being a software partner with SAP as a bit like an abusive relationship, and SAP would not hit you so hard if they did not love you so much.
This is why, in many cases, we have advised software vendors not to become SAP partners. One might argue that SAP does not need a partnership program at all. However, if it did not have one, customers would not see the logos and gradually accept that any application can be connected to SAP. In this way, the SAP partnership is much like a racket. It creates a need that did not exist before the partnership program, and the resolution is becoming an SAP partner, which allows SAP to exert its will over competitive vendors.
- By becoming an SAP partner, the software vendor falls under the influence and the rules and regulations of SAP, which are entirely designed to the benefit of SAP and the liability of the
software vendor partner.
- SAP interference with vendor partners has even gone to the extreme, where SAP has contacted software vendors and asked them to discontinue their products. Suppose that the software vendor complies with SAP’s request. In that case, SAP offers them compensation referrals to specialize in consulting in SAP products, which of course, is a direct competitor to the product that SAP would like to see removed from the marketplace. In many cases, “killing” an application requires purchasing the software vendor. However, in this case, SAP could attempt to do it (it did not work) through the partnership program.
- SAP has used partnership programs in the past. Notably, the xApp program Brightwork covered in the article, Its Time for the xApp Program to be Terminated, takes IP from partner software vendors.
There is more detail to the partnership program, but hopefully, this provides a flavor of the types of complications engaged in by SAP in its partnership program.