How to Cut Better Deals with SAP
Added 27th Jan 2012Vendor Management It’s crunch time for many SAP customers looking to hammer out new software deals and contract renewals. 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.
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,” says 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,” says 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,” says Tim Birnley, director of enterprise applications at SAP user Bentley Systems. Birnley also says users will “likely get a better deal in November than December.”
4 Consider à 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 says.
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 says. 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 says.
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 says.
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 says.
9 Get ready for 2012. According to Jones, it’s important to get a real handle on how crucial SAP is to your business overall before starting negotiations.
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