SAP CONTRACT RISK OVERVIEW
SAP's growth strategy is dependent on preserving annual spend levels and deterring attrition of licenses. As a method to support their growth strategy, SAP uses terms and conditions to eliminate the feasibility of switching solutions or reducing annual fees. In this SAP report, we dive into the top SAP contract "Gotchas" used to lock in customers and continually drive cost increases. The SAP contract language that is addressed in this report include:
1. SAP Pricing Transparency
The amount of detail needed to validate SAP cost competitiveness requires transparency into SAP product SKU numbers, product descriptions, list pricing, quantity, discounting, licensing metrics, achieved unit rate, and applicable tiers. But SAP bundles their proposals so there is minimal transparency into the cost drivers, limiting the customer’s ability to understand the quoted costs. This section details how SAP customers can strategically request the line-item transparency needed to validate pricing and mitigate cost exposure with SAP.
2. SAP License Metrics
SAP has over 80 different licensing metrics that govern their products. Each of these metrics impacts how costs are calculated and how licensing should be allocated. This level of complexity makes is very difficult for buyers seeking to understand their current utilization, forecasting needs, or costs for future purchases. For these reasons, SAP customers often fall out of compliance in relation to their SAP licensing, and owe true-up premiums and/or hefty penalty fees when audited. Additionally, SAP uses its confusing licensing metrics as a tool to inflate demand and force more licensing than needed on the customer. This section outlines solutions to help SAP customers optimizing SAP licensing and stay in compliance with current SAP licensing rules.
3. SAP Indirect/Digital Access
Indirect access can occur when SAP’s system is accessed or queried through a 3rd-Party application, interface, gateway, middleware, or automated process (i.e., bot/RPA). In situations like these, a single user account in SAP could actually represent hundreds of unseen users that need to be licensed. To address indirect access, SAP published a set of licensing rules referred to as “Digital Access” to remedy the compliance gap.
Unfortunately, most organizations are very susceptible to compliance related fees when it comes to indirect access. Tracking and controlling access to a solution can be difficult and SAP’s Digital Access counting tool (Passport) oftentimes yields inaccurate results depending on how well the customer utilizes and manages the tool to report findings. This section outlines how SAP customers can utilize indirect access reviews to help identify and mitigate compliance issues.
SAP is one of the most aggressive IT suppliers in the market and has designed their sales and pricing tactics to exploit as much revenue as possible from their customer base. To combat these tactics and drive a successful deal outcome, customers need to create and preserve a positive negotiation position that prepares the business for the inevitable SAP strategy. If you are looking for more information on how to secure best-in-class terms on your next SAP deal, review some of our other resources listed below or reach out to ClearEdge for a tailored SAP Assessment to help plan your strategy and mitigate risk.