SAP focuses hundreds of staff on customer cloud renewals

SAP building

SAP has hundreds of staff dedicated to ensuring customers renew their cloud subscriptions, as the company builds towards making more money from over-the-air software than its legacy on-premise business.

The tech giant historically made its money selling on-premise software, but is striving to earn most of its revenue from cloud sales by 2018.

To this end, SAP has an army of “customer engagement executives” spread across several countries, whose job is to ensure companies are using its cloud software and plan to renew their subscriptions.

“To us [customer renewals] are critical. If not, you’re filling a bucket full of holes,” SAP’s EMEA COO, Gonzalo Benedit, told Cloud Pro. “You might get new bookings, new contracts, but they might not renew. We have a dedicated organisation called customer engagement executives that is just focused on enablement and adoption. Hundreds of people, it’s big. We have it in all countries.”

Illustrating the difference between managing cloud subscription models to dealing with traditional upfront fees and license costs of on-premise, Benedit explained SAP is much more closely involved with its cloud users than it had been with on-premise customers.

The customer engagement executives go to the customer, working with them to make sure they are getting the most out of the services they have bought.

“For us it’s not that you make your sale and you don’t care. You need to be there all the time,” he said. “You need to make sure that the customer is adopting properly this solution because you know that if you don’t they will not renew.

“We have a lot of training and enablement workshops that we do with our customers to make sure they end up really adopting this solution.”

The news follows Oracle’s decision in January to hire 1,400 sales staff dedicated to promoting the database giant’s cloud products across EMEA.

As well as selling the software, these reps will also work with customers to see how Oracle’s cloud products fit into their IT strategies.

The consequences for failing to secure renewals can be tough – typically cloud subscriptions last around three years, the short contract terms being touted as an advantage for customers fearful of vendor lock-in after signing long-term on-premise deals.

However, it means vendors’ revenue can plummet if customers decide the subscription is not worth the money.

“If the customer is not adopting this solution, by the end of year three they will say ‘I’m not interested so why should I renew?’,” said Benedit.

This has led to a different approach to customer care in the cloud compared to on-premise, where support was usually aimed at fixing technical problems in implementations.

“In the cloud business the support is functional because it’s about how do they use the tool, are they using the tool in the right way so other people are enabled properly?,” explained Benedit.

It also means cloud vendors like SAP meticulously measure adoption levels within organisations so they can monitor how widely the software is being used.

Benedit said: “[We look at] which are the different levels of adoption so we can dissect the adoption rates by teams, by individuals, and you have great insight and a lot of information to support a customer.”

For SAP, it is crucial customers do continue to find its cloud software useful, after setting a goal that cloud will eclipse on-premise revenue by 2018.

Its latest financial results suggest it is going in the right direction, with its flagship ERP product, S/4 HANA, now counting 3,200 customers, though it is not clear how many use it in the cloud.

Meanwhile, its cloud revenue grew 33 per cent year-on-year.

However, a survey conducted by the UK & Ireland SAP User Group this month found 60 per cent of customers do not believe SAP has explained the benefits of its cloud products clearly enough, while one-third of the 100 respondents do not understand what the HANA Cloud Platform is.

SAP set about fixing this at its Sapphire Now conference in Orlando this week, where CEO Bill McDermott vowed to refocus on customers and share its roadmap for key products.

He said: “We have to know more about your business, we have to care more about your business.”