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By Denise Gonçalves
By all accounts, 2018 was a banner year for SAP partner ITS Group. The Brazil-based company increased software revenue in triple digits compared to the prior year and reached top-five status in its region among SAP partners, up from 20th in 2017.
The company credits its incredible growth to a new focus on SAP-qualified partner-packaged solutions and a move away from more complex project-based business, said Sergio Valerio, Partner and Vice President of innovation.
“We wanted to develop some innovative ways to market SAP S/4HANA, which was new at the time,” he said. “We also noticed that customers increasingly wanted solutions that solved a specific problem with a fixed scope and a fixed price. Packaged solutions were a perfect fit.”
It took a full year for ITS Group to develop and refine both its packaged solutions and the processes to sell/implement them. A year later, the hard work has paid off. And the company’s roadmap can serve as a blueprint for other partners thinking about a packaged solutions strategy.
Starting from Scratch
ITS Group had experimented with some best-practice solutions bundles for SAP ERP Central Component (ECC) through the SAP Rapid Deployment Solutions program, an experience that served as the impetus and foundation for developing SAP-qualified partner-packaged solutions for SAP S/4HANA, Sergio said.
The company spent much of 2017 developing its first packaged solutions, completing four SAP S/4HANA-focused offerings by the end of the year around consumer products, chemical, services, and manufacturing. Industry knowledge in those four areas, albeit more traditional project-based experience, gave ITS Group a foundation to develop solutions around, and a known customer base to target.
ITS Group sold its first packaged solution at the end of 2017.
“At the time, net-new names were low for us,” Sergio said. “We needed to change. Many customers didn’t want to buy or move to SAP S/4HANA. They had questions about how it worked, functionality, if it was proven. Packaged solutions were an easier way to show customers how it worked and what it did.”
Lessons Learned
Transforming the business to focus on packaged solutions was not without challenges, Sergio admits. Some customers and employees didn’t adapt to the idea that projects don’t need to be complex or take many months to complete.
“You don’t need to do everything at once. You have to learn to treat it as a product, not a project,” he said.
To change that old way of thinking, ITS Group has hired people with no previous SAP experience. New ideas and new attitudes have been refreshing, according to Sergio.
The transformation required an internal process realignment. The company started on the technical side, allowing technicians time to develop standardized, repeatable solutions. After that, sales and implementation process changes were created to better serve the packaged solutions model. The company hosted several internal workshops for employees, explaining how packaged solutions work and why they were important to ITS Group’s future success, Sergio said.
“We said this is what the market is asking for. We spent a lot of time on that,” he said. “The message was that we invest in packaged solutions or we fall behind. Customers won’t buy the way they have in the past. Big deals are coming less and less. What’s important to remember is that when you move to target the midmarket, you have many more opportunities.”
But those opportunities need to be nurtured. Many SME prospects initially assumed SAP would be too complicated and too expensive. ITS Group crafted a sales pitch that its salespeople understood and complemented the solutions that had been developed.
Customers: Predictability, Flexibility Are Big Benefits
ITS Group increased its digital marketing efforts including videos and presentations that highlight the fixed scope, cost and implementation time that packaged solutions provide. Those efforts have worked well with prospects that have done their research and know what they want when they contact ITS Group, Sergio said.
“When we first touch a customer, they understand the proposal and they want to buy. We can sell an SAP S/4HANA solution in three or four weeks. Why? They almost know us better than us,” he said. “The idea is to have more material that the customer can see and understand before talking to us. It works. Some companies have found us on the web and want to start a conversation. Our win rate has increased from about one in four to one in two.”
A package to convert customers from ECC to SAP S/4HANA is also available, in line with SAP’s goal to move all customers to the newer platform by 2025. According to Sergio, “This is a new frontier. It’s not for net-new names, but for the SAP install base. We think there’s a lot of opportunity for us.”
Customer reaction has been overwhelmingly receptive to packaged solutions, who cite predictability and flexibility.
Brilia, a Brazil-based manufacturer, said an installed SAP S/4HANA package helps its employees create more innovative lighting products for customers. “The fact that ITS Group proposed a clear roadmap with predictable outcomes was a main factor in our decision to choose them as our strategic partner,” said Vinicius Marchini, CEO of Brilia. “When I see the operation of the platform, in addition to ITS Group’s qualified consulting, I know we are on the right track.”
ITS Group has been a strong partner to Brinox Group, a Brazil-based kitchenware company, since the customer’s initial SAP ECC implementation several years ago. Now ITS Group’s SAP S/4HANA conversion package is setting Brinox up for future success, said Gustavo Pretto, Brinox CFO.
“They were able to give us a clear picture of what we could expect from our solution, so we could plan our resources accordingly, reducing the project risk and improving efficiencies,” Pretto said. “This is critical to the success of our business.”
What’s Next?
ITS Group now focuses even more of its resources on developing packaged solutions business, with the goal of doubling sales this year and ideally closing one deal per month, Sergio said. Also, the company intends to develop additional packages around micro-verticals, for example a fashion solution under its consumer products solution.
“It’s all about creating the best fit for the customer,” he said. “Right now, we have horizontal solutions. We want to put some flavor on those. The idea is to move our organization to be more like SAP — more vertically focused and more innovative leveraging the intelligent enterprise. We want to integrate SAP solutions like C/4HANA, SAP Cloud Platform and Ariba to create a comprehensive solution.”
As part of its packaging approach, ITS has also developed some standalone solutions with its own IP using SAP Cloud Platform and is leveraging SAP App Center to promote them. More of those solutions are being developed to address different needs of the market and will soon be available.
Eventually, packaged solutions will bring higher margins, but the goal now is to focus on driving revenue and building solutions capabilities, Sergio said.
“Each new implementation is more efficient than the last. We do new features, adaptations. We’re reinvesting,” he said. “Packaged solutions can solve an immediate need and then we can discuss additional solutions and products to fill gaps. There’s a lot we can do. Now we have to go and do it.”
To find the right SAP-Qualified Partner-Packaged Solution that fits your needs, visit the SAP Partner Package Finder.