“Our partners can work with companies with a valuation of up to $200 million, which falls under our definition of the SMB market”

SAS Institute has finally realized that to ensure rapid growth it has to take
its solutions through the channel, especially if it needs to make inroads into
the fast-growing SMB market. Phillip Beniac and Miles Mahoney explain that
having rolled out the channel program in the US, the company has learnt some
lessons and incorporated several changes in the program to take it to 13 other
countries, including India

What is your core customer clientele?

PB: We have around 5,500 customers in APAC alone. We have been in
operation from the US for 25 years and are present in the APAC region for the
past 15 years. The US contributes 40 percent to our overall revenues, EMEA
brings in another 44 percent and APAC 11 percent. This makes APAC our third
largest market. We hope this number to go up to 15 percent.

SAS has traditionally being working with enterprise customers. Why is it
now looking at the SMB segment?

PB: What we have noticed is a dramatic increase in demand from the
mid-sizes or SMB companies.

Our strategy for the last five years has been to target only the corporate
houses. But we are seeing the market open up. So far we got our marketshare of
25 percent of the global business by going purely to the corporates. Now, if we
want to increase our marketshare, we have to look beyond the enterprise to the
next set of BI application, which is the SMB clientele. Currently, the SMC
constitutes 35 percent of the overall business intelligence (BI) applications
market.

Phillip Beniac VP-APAC SAS Institute

SAS has decided to operate through the channel. What made you take this
decision after almost 25 years of going direct?

MM: We realized if we want to cater to the SMB customers, the best way of
going to market is through the channel. This is why we launched our reseller
program in the US in 2006. Since then we have been building support and
infrastructure to manage the channel across other countries as well.

Why did you not launch a global channel program rather than introducing it
in the US first?

MM: Since the channel was a new business area for us, we wanted to go about
it gradually. We have 86 resellers under the channel program and they are
instrumental in bringing in 250 customers. Now, we are looking at recruiting
more partners to our channel network. In the first phase, we will take our
reseller program to 13 countries outside the US, including India.

What USP are you offering the channel?

MM: Earlier, a solution provider would have to go to two to three vendors
for various application components to cater to the BI need of a customer. Now
they can get everything from us, which eases their business operations.

We have also created nine new application bundles that partners can select to
address the various BI needs of their customers. These are span data collection,
integration, analysis and reporting.

Miles Mahoney VP-Strategic Alliances and Channels, Worldwide Marketing, SAS Institute

Since you are new to the channel, how will you ensure that you will meet
their needs?

MM: Our direct sales team was earlier interacting with the customers and we
have derived from their experiences, to put in a foundation for selling

and have invested in support for the customer and the channel. This will be
extended to the channel.

What kind of customers would you like to work with through your channel in
India?

MM: Our partners can work with companies with a valuation of up to $200
million, which falls under our definition of the SMB market. We term companies
that have a valuation of above this figure and up to $1billion as the mid-sized
organizations, and here our direct sales will work with our partners. They will
also hand the enterprise customers of over $1 billion valuation. So the SMB
clientele will be addressed entirely through the channel.

Who decides which channel partner will handle which companies in the
mid-markets segment? Won't this give rise to channel conflicts?

MM: For this, we have come up with a registration system. If a partner
registers a customer with us, he will have the exclusivity to handle that
customer for nine months.

But why are you keeping this exclusivity for only nine months?

MM: When I say nine months, I mean getting business from that client within
nine months. We would not like to let a client account stagnant because a
partner registered it and then could not develop the customer and bring in
business.

What is the channel compensation model that you have devised, since
selling applications is a skilled business and therefore the remuneration should
be commensurated to it?

MM: We have YoY renewal model and have a 95 percent renewal rate. Partners
who get the renewals will get 25 percent of that annual renewal coupled with
some other perks which in turn are dependent on factors like customer
satisfaction ratio, number of people trained, and ability to up sell and get
more packages.

Additionally, partners get a teaming fee for getting new accounts registered
with us and this could be across any of the business segments we target directly
or indirectly.

We have also allowed for a little bit of localization of our current channel
programs for all geographies. So while 70 percent of the program will have a
global de facto outline, the remainder could be tweaked for local conditions.

What is the kind of support infrastructure you have put in place?

MM: Each place will have a local country channel account manager to work
with partners. We will also have an online repository for them to get technical
knowledge and realtime information about SAS. We will also impart training to
their team, though we will not issue any physical certificates.

We are looking at signing up around seven partners in India by the end of
2007. While signing up partners we will look at their ability to sell BI
applications, the geographies they operate in and their domain knowledge.

What is the biggest challenge for SAS as it embarks on indirect business?

MM: Our biggest challenge is getting our message across to the right
partners and getting our name out front to customers. Also, making the channel a
part of our corporate DNA will also take time, since for a quarter century we
were talking to customers directly.