ASE First, or Go Directly to SAP HANA?


Expressway_SAP HANAWith many of our clients planning on an eventual migration to SAP HANA, some of them are contemplating whether to move to ASE first or go directly to HANA. Before deciding one way or another, we recommend reviewing the capabilities and pricing models of ASE and HANA as a prerequisite to a broader strategy discussion with SAP.

Capabilities

Many SAP customers rightfully start their licensing conversations with capabilities. If your company is strictly looking for a high performance database-management system in the interim, SAP ASE may be the right option for you. When your company eventually builds the business case for SAP HANA, the transition should be of ease with the assistance of Sybase Replication Server.

If your more immediate needs go beyond a traditional database and require transactional and analytical processing, SAP HANA would be a more appropriate fit for your company to consider. Companies only expecting to use the HANA platform with SAP solutions will consider the runtime version which has two license options available. SAP customers can choose between the HANA runtime for BW license or the HANA runtime for Applications and BW. The distinct difference between the options is that the HANA runtime for Applications and BW license includes the ability to run the Business Suite applications. With some concern about the inability to run all Business Suite applications on HANA, SAP has been including a license to ASE within the HANA runtime license in order to alleviate any customer hesitation.

Pricing Models

When it comes to licensing SAP ASE, SAP’s runtime pricing model is 8% of your SAP Application Value (“SAV”).  Since SAV is based on the net license fee value of your base of licensed software, it is important to take a retrospective look at your previous SAP negotiations to determine how competitive they were. If you determine through benchmarking, that your previous deals were less than competitive, you can request SAP price ASE according to the list value of your install base plus a more competitive discount than previously negotiated. You will need to manufacture negotiation leverage and employ an effective strategy, but this approach should help right the wrongs of your past negotiations.

With the HANA runtime license, pricing is based on the HANA SAP Application Value (“HSAV”). Depending on whether you choose to go with HANA Runtime for BW or HANA Runtime for Applications and BW, the runtime license will cost you 8% or 15% of your HSAV respectively. Unlike ASE, SAP has not presented an option of pricing HANA according to the list value of your install base plus a more competitive discount.

Strategy Discussion

ASE to HANA

If you are not in immediate need of HANA’s functionality or cannot justify the business case, ASE to HANA is a good licensing strategy to consider. Your company can typically make a smaller capital investment to fulfill your interim database needs and with the appropriate degree of market intelligence and negotiation coaching, your company can obtain a credit toward the licensing of HANA in the future.

HANA Direct

If you have an immediate need for HANA’s functionality and a supported business case, going directly to HANA is likely the best path. And just because you are headed there does not mean you can’t leverage SAP’s desire to push HANA licensing fees for its quarterly and annual goals. With this leverage, not only is it an opportunity to obtain a great deal on HANA, but it also represents a great opportunity to renegotiate all of the important commercial aspects of your overall SAP relationship.

Even though HANA is non-discountable, SAP has been willing to make several other concessions which surely can make for a great overall deal. In our recent SAP negotiation advisory engagements, SAP has been persuaded to include incentive credits for migrating to HANA as well as special programs for offsetting the burden of HANA-related maintenance.

We recommend using your migration to HANA as the optimal time in your relationship to revisit your future license discount options, maintenance protections, exchange rights and other commercial terms that represent a scalable, agile and flexible structure. A refresh of these commercial terms will allow you the opportunity to optimize your relationship going forward.

In the end, you may be asking yourself, “do I solicit an ASE or HANA proposal from SAP?” In our experience, the answer to this question is “both.” Once you receive a proposal from SAP, your company can weigh the capabilities, pricing and incentives associated with each offering. If an eventual need for HANA exists, your company may find that with competitive pricing, special incentives, and a holistic restructuring of your go-forward relationship with SAP, the business case more specifically supports a move directly to SAP HANA.

I welcome your questions and comments so please do not hesitate to contact me at mtucciarone@upperedge.com  In addition, if you are interested in learning more about our SAP negotiation and audit defense advisory services, please call 617-412-4335 or email info@UpperEdge.com for more information on how we can help.

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