Your business and IT team has spent countless hours assessing your needs, evaluating your options, and selecting an SAP cloud solution. The worst is over, right? All you need to do is to sign on the dotted line.
As the sponsor for this initiative, we recommend checking the box on a few principles before putting pen to paper on your next SAP cloud deal. This level of rigor will leave your company positioned to manage a more transparent, scalable, flexible and predictable relationship with SAP for the initial term and subsequent renewals.
Despite their preliminary resistance, SAP has been willing to provide transparency in cloud deals. This means that your company should be made aware of more than the blended discount provided. You should see the list price, net price and associated discount for each line item. Not only will this provide you with the ability to confirm the discounting provided by SAP, it will also afford the opportunity to validate the business case for each line item in lieu of a bundled approach.
SAP has also been willing to provide flexibility to its customers in the form of commercial terms. If your company has a substantiated business requirement for flexibility, we recommend articulating the business need to SAP and a proposed commercial term solution. When possible, SAP has been willing to incorporate proposed commercial term solutions. For example, if you are signing a 3-year deal but know you are interested in other line items, your company should be afforded price locks for those components during the term at a similar discount.
Knowing what good looks like is important. If the total contract value over the term is compelling, SAP has been willing to provide competitive pricing predictability for subsequent renewal terms. If you do not secure competitive pricing predictability for subsequent renewal terms, you may find yourself in a position where the cloud offering no longer meets your business case based on the compounding renewal increases. This is huge and often overlooked! For example, if you are signing a 3-year SAP Concur deal, SAP should be offering you some form of renewal protections for subsequent terms (ideally in the form of an initial lock and subsequent cap on increases).
Companies are aggressively moving to the cloud and for good reasons. However, in our experience, overlooking the importance of getting the deal right the first time has long-term implications given the compounding effect to operating expense. When negotiating SAP cloud deals, the most important principles are transparency, scalability, flexibility and predictability. As you consider your significant cloud relationships, we would welcome the opportunity to discuss the specific circumstances of your initiative and determine how best to ensure long-term success.
To learn more about our SAP contract negotiation services, please contact Carole Jacques or call 617-412-4313. As always, we welcome your comments.