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Software AG wants a lot more channel revenue

Software AG has mapped out a souped-up channel strategy as it attempts to improve the quality of its partners and generate more recurring revenue from its business integration, IoT and analytics solutions. The company held an international press event at its German headquarters in Darmstadt this week and IT Europa was there to get a measure of its channel efforts. Software AG CEO, Sanjay Brahmawar (pictured), said the company now wanted to focus on key geographical markets when it came to ploughing-in extra resources to try and generate high sales growth.

The “priority” he said was North America, the UK, Germany, France, Japan and China. He said the firm currently had around 500 partners in its global ecosystem, but that they didn't deliver much collectively at the moment. He said: “We want to make more out of our ecosystem, only 5-10% of our sales currently come from partners, and we want much more.”

The firm has put aside €50m to change company structures, its go to market strategies and to fund potential acquisitions. It has bought two companies in the last year to bolster its IoT and analytics efforts, and is aiming to generate a higher slice of recurring revenue.

Brahmawar said: “There is now a focus on subscription revenue to enable our customers to get their software through Opex budgets. Such purchases are easier for them to get approved and there is less waste than perpetual licensing. There is less shelfware as what they purchase is actually deployed and used.

“The target for most software companies now is to generate 80-90% of recurring revenue and that's what we are aiming for.”

As for partners, a prime example as to where Software AG is going is its tie up with distributor Tech Data and Dell to sell an IoT edge networking solution, that combines its Cumulocity IoT deployment, management and analytics software with a select range of Dell servers.

The company is aiming to get many more pieces of hardware certified to use its software and at the conference it inferred that HPE may well come on board in the IoT space too. HPE recently announced new systems it was selling into the edge IoT space in partnership with Samsung and outsourcer Tech Mahindra. It's a growing market, with Lenovo also recently announcing edge data management solutions.

Brahmawar knows the company has a challenge on its hands though. It's full year results showed a slight dip in overall sales, and while the fledgling IoT business showed an increase in business, it only represented €30m out of the company's total sales of €866m in 2018.