How to Cut Better
Deals With SAP
Analysts and users offer tips on how to get
the best contract terms from SAP as the year
draws to a close. By Chris Kanaracus
1. Take stock of your existing SAP investments. “If
you’re in the middle of [negotiations], the best thing
you can do to arm yourself is figure out your usage,”
said Ray Wang, CEO at Constellation Research and
a veteran SAP contract negotiator. You could drop
unused licenses or move them to other applications.
2. Make SAP’s salespeople earn their money. “You want
an account manager focused on ensuring your success
and solving problems, not searching for new revenue
opportunities,” said Forrester Research analyst Duncan
Jones in a report. Contracts should compensate SAP
salespeople for “aspects such as product adoption.”
3. Think about bulk purchases. “We would [get] the
best deals by accumulating multiple product purchases
and negotiating hard down to the last minute,” said
Tim Birnley, director of enterprise applications at
SAP user Bentley Systems. Birnley also said users will
“likely get a better deal in November than December.”
4. Consider a la carte deals. If you buy on a product-by-product or site-by-site basis, you might end up paying
double the amount you’d pay in an enterprise deal, but
the expanded choice and flexibility could make it worthwhile, Jones said.
5. Don’t lose sight of the big picture. If you’re hammering out a new deal, secure contract terms that
address the application’s full life cycle, from purchase
to implementation to eventual replacement, Wang
said. You should even think about what-if scenarios,
such as mergers and acquisitions.
6. Don’t use the L word lightly. Threats to leave SAP
only work if you’re serious. “To get out of a contract,
you need to be ready to leave,” Wang said.
7. Consider becoming an early adopter to take advantage of discounts — but be wary. SAP has been rolling
out many new products recently, and sales reps are
no doubt pushing those offerings hard, hoping to get
customers with stable core ERP systems to open their
wallets. But you should be aware that heavy discounts
offered by an eager salesman might be offset by hefty
annual maintenance fees over the long run, Wang said.
IT’S CRUNCH TIME for many SAP customers looking to hammer out new software deals and contract renewals before the end of the year. Experts acknowledge that it might be difficult to persuade SAP to budge on certain things, such as annual
maintenance fees for its applications, but customers can take
steps to improve their chances of getting strong returns on their
investments in SAP software. Here are nine tips to help SAP
users secure the best possible deals for both the short term and
the long term.
8. Have heart-to-heart talks with SAP. A strong
relationship involves more communication than yearly
contract talks. You should line up “strategic alignment” meetings
that include top executives to “help clarify stakeholders’ opinions
of SAP” and “enhance SAP’s opinion of you as a potential enabler
rather than merely a negotiation adversary,” Jones said.
9. Get ready for next year. According to Jones, it’s important to
get a real handle on how crucial SAP is to your business overall
before starting negotiations. u