How SAP Could Enable You and Me as Software Vendors with a "Backed by SAP" Program

[former_member182046]

At yesterday’s SAP Community Meet-up in Walldorf, there was a great discussion triggered by Dr. Christian Baader of SAP, who works with partners and tries to create conditions under which the partner ecosystem can thrive. The discussion revolved around the question: “What would it take for more individual developers to create real apps on HANA Cloud Platform, and market them through channels such as SAP’s app store?” I threw some ideas into the discussion, and today I decided to write them down and put them out for discussion with the wider community. I’m interested in your ideas, preferably if you come up with suggestions on how to close feasibility gaps.

Motivation

SAP wants to enable a thriving ecosystem around its technology platforms, specifically HANA Cloud Platform and HANA.

Situation

There is a large number of individual developers and small firms (1-4 employees/co-owners) for whom it is difficult to go to market with HCP-based apps for various reasons. With the right enablement, this could evolve into a thriving ecosystem that would increase the attractiveness of HCP, similar to the way competing platforms gain values when third-party apps are abdundant.

This potential is currently hindered by the following factors:

• There is a high cost involved for individual developers to acquire developer license, join partner program, get access to "proper" development systems without the major limitations built into the HCP trial landscape.
• The lack of a larger support organization creates dependency from one individual, which is not acceptable for enterprise customers.

Challenge

In the worst case scenario, a micro-ISV is no longer able to support their solution (company shuts down, developer dies, etc.) and a backup support organization needs to be able to take over and fix the issue.

What if SAP could provide this support organization and thus enable a large number of developers to go to market with solutions that are otherwise perfectly viable?

Solution

Set up a process and documentation standards that enables offshore support teams to quickly support a solution.

The support organization needs what they always need (same as with SAP's support infrastructure):

• App must be coded according to guidelines.
• Comprehensive documentation is required.
• Use of SAP HCP infrastructure is required to ensure that support personnel has full access to source code repository as well as the ability to make changes and produce a new build anytime.
• Fulfillment of these requirements needs to be ensured with reviews and final supportability approval.

(Please note that supportability approval is not the same as quality approval. SAP does not assert that the app is good and works properly, it merely asserts that SAP is able to provide support personnel in case a small partner ceases operations temporarily or permanently.)

This would result in the ability of support personnel to offer AGS-type support to apps they haven't built themselves and have no prior familiarity with, similar to the way support and maintenance teams are today taking over internal applications that were built elsewhere.

Cost aspect

The review process especially is going to be a cost-driver, so it's clear that the "Backed by SAP" programm comes with a price tag. This means that it will not automatically be economically viable for very low-volume or low-price apps but focus on apps for which sufficient revenue through volume or price can be expected.

This is perfectly reasonable, because the programm would add great value to micro-ISVs, customers, and SAP.

Other contributing factors

• Demo Cloud as part of the development platform: A major contributing factor to the success of SAP Fiori has been the easily available “SAP Fiori, Demo Cloud Edition” at http://www.sapfioritrial.com/. No enterprise buyer buys an app from an SAP app store they haven’t experienced and tried out. For small vendors to be successful, an infrastructure similar to the SAP Fiori, Demo Cloud Edition is required that gives potential buyers easy access to demo and exploration versions of apps in the app store.

This should be integrated with the HCP development environment, so that developers can easily deploy a demo version of their app into a demo cloud; this demo version would then be easy to launch from the app store.

• Demo cloud enables lead generation: Vendors are interested in sales leads. They want to know how has looked at their app, and start a dialog with potential customers. This should be integrated in the app store, for example vendors could make a setting that the demo version of the app is available to anyone who has shared their contact information and agreed that the vendor reach out to them.
• Beyond hello world: As mentioned earlier, the current HCP trial is somewhat limited in that it doesn’t allow developers to explore the entire lifecycle of a cloud-based app; you can explore the coding aspect but not the interplay between, say, a development version and a currently productive version, go through the patch process, how to prevent data loss when productive table structures are changed in the development version, and so on. It would be helpful if there was a trial landscape that is basically identical to the productive landscape, except for support and legal aspects.

Do you think such measures could enable individual developers and small companies to release and market real HCP-based apps? Is this something you have been waiting for? Personally, I think it would help a lot of people become product companies who are today limited to working as consultants. Let me know!

[Ulli_Hoffmann]

Hi Thorsten,

thx for summarizing and continuing the discussion with Christian at the Stammtisch Meet-up. I really enjoyed it and agree with all your suggestions. They're all profound and will be required in case HCP is going to evolve into a cloud platform of broad adoption by SAP customers and partners.

Besides the mentioned infrastructural/eco-system-based requirements, it would also be necessary to discuss/consider a destined marketing channel for applications build by the above mentioned focus group (individual developers and micro-ISVs).

This could e.g. comprise short presentation/demo/pitching slots at major SAP events like TechEd or Sapphire in order to gain visibility. I could imagine these presentations being slightly more technical since seller and developer will probably be one and the same individuals or at least closely related.

Furthermore, SAP should also offer something similiar as Apples annual "Design Award" in order to promote apps build on HCP. How about something like a "Simplicity Award" for an app that is tackling a complex issue in a simple way?

regards,

Ulli

[former_member182046]

Hi Ulli,

Thank you, those are great suggestions. There are some similarities to the Startup Focus program that also uses SAP events to promote solutions from the startups, but for our micro-ISVs that target SAP customers, the targeted customers would already be present at the event, so this would be really of great value!

And I love the idea of the "Simplicity Award." After all, the directive should be: "Run Simple" (and, failing that: "simply run").

Cheers,

Thorsten

[Former Member]

Great post Thorsten,

working for a small ISV myself, our team was eager to leverage HCP as the foundation of our solution as we tightly integrate with SuccessFactors, use SAP UI5 and need advanced analytics capabilities.

We had a couple of meetings with the partneredge team and needed to kill our plans to build on HCP. Let me explain why:

In SAP's point of view HCP should rather be used to build custom extensions to SAP applications already used by the customer. So this customer needs to enter a relationship with SAP to licence it's own HCP instance and subscribe to the partner app within that instance.

This scenario doesn't work if you want to build a multi-tenant SaaS application, as potential customers only want to have a relationship with that app vendor, not two relationships: platform provider and app vendor. In addition we don't want to replicate our code into separate instances and run all customers on the same instance.

Luckily SAP does indeed offer a package for ISVs that would solve these issues: at a pricetag of 25% of the revenue - this is pretty much all the margin a small vendor makes on the first clients.

Unless this situation - or more specifically the pricing - will be adjusted I don't see anyone build an independent software product on HCP that is not a custom extension. We decided to use IaaS hostet by T-Systems and maintain own own HANA instance, which needs more resources on our end but costs a fraction of the price mentioned above.

Please let me know your thoughts!

Regards,

Martin

[former_member182046]

Hi Martin,

I understand why that would make sense. In many cases, you will have a cheaper solution AND more control over many aspects of the solution when you run them in your own IaaS-based environment instead of using a PaaS service such as HCP.

SAP needs to make their actions count and show that they are seriously competing, and not just targeting those who are completely locked in (factually or by choice) into SAP technology all throughout the stack.

Best,

Thorsten

[Former Member]

Hi Thorsten,

thanks a lot for the interesting and enjoyable discussion at the meet-up last Wednesday and the write-up of your ideas in this post.

There is a lot of pressure these days on practically all businesses to understand, how the advantages, new digital technologies can provide, might be leveraged to reinvent the way, business is conducted.  HCP should be able to play a major role in this exercise for all SAP-customers, as it allows to quickly develop and deploy innovative front-ends to existing processes as well as completely new processes based on the data in the existing environment.  As a platform it needs a large followership, not just in terms of end customers using it, but also partners leveraging it for offering own applications.  That is, why this discussion is so important and your ideas, how to support small partners’ credibility are very much appreciated.

Let me point out some complementary personal thoughts to your suggestion:

• If a developer decides to start offering packaged enterprise applications, (s)he will do this rather in the context of a company or startup, than as a freelancer.  Otherwise it will be difficult to credibly sell to companies. This would be true even if a backup support promise would exist, as this would only provide a solution for the “worst case scenario”, as you put it.  And as such it would not backup the continuous improvement of the respective cloud solution, which will be another major expectation of many customers.
• As soon as we talk about a company setup, our SAP PartnerEdge program for Application Development (part of SAP PartnerEdge - Build) will be the right vehicle to get everything needed from developer licenses and resources, enablement and go-to-market support for quite a competitive fee (2000 EUR p.a. base fee for being member of the partner program plus 1500 for the necessary HCP-resources).  Among the 1400+ members of this program, of which about 400 work with HCP, we find quite a lot of small and very small firms including startups, which illustrates the point.
  Please visit our Partner Center at www.sapadpc.com for further details.
• The SAP PartnerEdge program for Application Development also provides the option to embed HCP into the partner’s solution for a simple revenue share.  This will allow the application owner to sell the application as a cloud service completely independently, ie, the customer does not need to contract an HCP-instance separately.  The scheme also supports multi-tenant apps, of course.  Our partners give us very positive feedback on the attractiveness of this option and its risk/reward sharing characteristics and adopt it eagerly.
• The idea of the backup support offering as you described it, sounds very enticing from a partner point of view.  Some hurdles will need to be overcome to make it work in practice, though:
  • The solutions would need to undergo a thorough (and therefore costly) technical check, not just once, but for each release (which in the cloud might happen quite frequently, some vendors drop new code on a bi-weekly basis), in order to protect the support vendor's risk position.
  • This check could not be performed by SAP, as it would expose the IP of the partner to another, potentially competitive applications vendor.
  • The app owners (and their shareholders) would need to agree to a number of legal and commercial prerequisites, eg, regarding handling of IP-rights in the cited “worst case scenario”, and commercial terms of the support arrangements.
  • All these prerequisites would need to be communicated to the customers in a credible, clear and concise manner in order for the offering to have its appeasing effect.

While all this might be well doable, it becomes clear, why such a backup support offering is much more difficult to formalize with (legally independent) partners than between different departments of the same company.  The overhead would be significant – and might be disproportionately high compared to the initial development effort of the partner app.

If you or anybody else in the community know of any examples of vendors, who offer such a support option (for commercial apps with protected IP), I would be most interested to get to know those and understand how they cope with these challenges.

Thorsten, thanks again for bringing your suggestions regarding this important topic into the community discussion.  I am looking forward to the community’s response, as well as further thoughts, hints, and ideas on the important topic of how to bolster the credibility of partners entering the packaged applications business.

Best regards,

Christian

[Former Member]

Hi Martin,

thanks for your comments.  With your activities around extending SuccessFactors, your team is definitely engaged in a hotspot for HCP-based apps building. Partners in the SAP PartnerEdge program for Application Development have already published more than 20  HCP-based extensions to SuccessFactors, mostly to the EmployeeCentral solution.  You can look those up under www.sapappcenter.com. This week, we are running a so-called PowerWeek in order to enable partners onsite just for building more such extensions.

Extending SAP solutions is an important focus for HCP overall these days.  But this includes packaged apps as well as custom apps. And I would argue, that many existing SAP partners will engage in an IP-based business around extensions in order to create another scalable revenue stream.

As you rightfully point out, our partners are also not depending on somebody else selling the HCP-instance to the customer.  Rather, they can go to market as independent SaaS-providers based on our offering to embed HCP for a simple revenue share of 25%. According to the feedback we get from our partners and market observers, this pricing is indeed competitive.  Please visit our partner center at www.sapadpc.com for further information.  This embedded PaaS-option also allows the partner with a multi-tenancy enabled application to serve multiple customers from the same instance.

Our 400 application development partners active on HCP have already produced close to 300 commercially available apps, that can be deployed on HCP.  Some have already deployed their apps with HCP embedded, either in single- or in multi-tenant settings.

Best regards,

Christian

[lucam_shamat]

Hi Thorsten,

me and my team are quite new in this specific ecosystem (while personally I'm not really a novice to SAP applications, as I'm working with them since 1999...) and your post summarizes perfectly what we're looking for. In fact we're going to join the Startup Focus program through the roadshow meeting in Berlin (12. May 2016) and explore how to get access to more technical resources.

While the point about supportability is certainly a relevant one for customers, I think that a small ISV like us needs a sort of entry point comparable (for instance) to the one you get with Apple:

• free development tools
• 100USD/year developer program

Of course in that specific case we're NOT talking about a cloud platform and we're NOT talking about the enterprise market (or not mainly), BUT it looks like we all agree that the HCP trial program has main limitations we're just starting to discover:

• no interaction with (even simulated) production systems;
• no access to system security (which prevents real testing in most cases);
• very limited training documentation and often just too outdated to be used.

From the perspective of a typical startup with limited headcount, limited financial resources, but great agility to design and adapt, the app ecosystem at SAP looks just like a very thick wall: basically the initial investment and the limited resources are very discouraging.

I hope attending the Startup Focus roadshow we'll learn about additional options to start moving into this exciting ecosystem and my comment could be therefore somewhat "unexperienced", but at this stage I would strongly recommend to consider how to grant full access to a decent amount of computing resources (and online training resources) for one year through a mostly symbolic fee (USD100/year per developer is certainly acceptable).

Last but not least: HCP is (as you all know) a huge ocean to dive into. For this reason keeping the training material in sync is certainly extremely complex, but nothing (at least for us) discourages a new team like keeping reading or watching training material where most of the suggestions (over one year or slightly more) are so outdated to become practically unusable.

Thank you again,

Luca

[Former Member]

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[vaciliberti]

Hi Thorsten,

Thank you for an informative post. My company, Reliability Dynamics, has developed an SAP S/4HANA-certified Add-on “Industry Standard Solution for Plant Maintenance (ISPM)” (LINK). ISPM is a native SAP app for SAP, comes complete with configuration (BC sets), master data content, and comprehensive documentation (installation guide, configuration specs, change mgmt. and training, test/UAT scripts, etc.). It has market penetration (early adopters) in Fortune 500 and US federal customers. Marketing has been exclusively through non-SAP channels.

I have found it challenging to engage with SAP to bring the ISPM product to market. As a micro ISV, what is the best way to engage with SAP for commercialization/GTM?  Is there a communication channel for ISVs to the respective SAP product owners (PM in this case)? How can a micro ISV get a product on the SAP Price List? I investigated the SAP PartnerEdge Build Program, which seems to be geared towards non-native integrated apps. Is this an accurate assessment? Regarding the App Store, how effective has that been in GTM for small ISVs? Would you be able to share any success stories?

Any feedback and/or advice would be greatly appreciated.

Best regards,

Tony

Tony Ciliberti PE

Principal Engineer | Reliability Dynamics LLC | Linkedin: tciliberti

Mobile: 574-274-3887 | Office: 574-314-5099 | www.reliabilitydynamics.com