How SAP and Kronos’ Reseller Agreement Affects Existing Customers

Tick tock.  Time to think about what the global reseller announcement between SAP SuccessFactors and Kronos means to existing customers.

Kronos first partnered with SuccessFactors back in 2013 but this year, they are taking their partnership to a whole new level.  On January 8th, SAP announced a new global reseller agreement with Kronos that enables SAP SuccessFactors to sell Kronos’ Workforce Dimensions solution under the name “SAP Time Management by Kronos” and make it an option under its SAP SuccessFactors human capital management (HCM) suite.

This move may seem curious given SAP’s prior partnership and reseller agreement with WorkForce Software that was first announced in 2015 and expanded in 2016. Though the WorkForce Software agreement is still in place, this latest announcement suggests that SAP will prioritize reselling Kronos’ solution.  Whether that is the case or not, it is not surprising to see SAP adding 3rd party solutions its customers are already using to its portfolio.  It would also not be surprising to see those customers confronted with unexpected changes to their agreement as a result of this new partnership.

Whether you are an existing or potential SAP or Kronos customer, it is important to consider the following issues regarding your current or potential use of Kronos vis-a-vis SAP as the reseller.

  • Contract Simplification

Integrating 3rd party solutions into their customers’ SAP agreements is a standard business practice of SAP.  While this may be more efficient from an administrative perspective, there are risks involved for customers.  The primary risk is losing the advantages of market-leading commercial terms previously negotiated with Kronos.  Many of our clients have been able to obtain favorable terms in their Kronos agreements such as Service Level Agreement (SLA) credits which may not always be as favorable (or even available) via a reseller arrangement with SAP.

Conversely, if you are looking to materially expand your Kronos footprint and are considering a purchase through SAP, you may have the ability to leverage this as an opportunity to revisit and improve your existing SAP agreements and terms.  However, understanding how competitive your agreement is will be key to making the right and most beneficial decision for your company.

  • Terms and Conditions

Purchasing Kronos through SAP may, by its nature as third-party software, include limitations on SAP’s rights and obligations to you as a customer, which vary from SAP’s own software.  SAP often reduces or excludes its obligations to customers related to issues such as warranty and limitations of liability on claims related to software licensed from SAP.  In addition, SAP excludes third-party software from exchange rights and may limit or reduce discount protections for future purchase. It’s important that you understand what these variances are and factor them into your decision to leverage SAP as a reseller.

  • Pricing

It would seem intuitive that SAP’s reseller agreement would position it to provide better pricing to its existing customers than a customer could command negotiating directly with Kronos.  While this may be the case, it’s still important for a customer to have market intelligence and insight into their current pricing versus SAP’s proposed pricing.

Similar to the contractual terms discussed above, an informed client with an understanding of the reseller strategy will be in a better position to make decisions not only on their license purchase strategy but also on their overall cloud portfolio with SAP.

  • Digital/Indirect Access

In April of 2018, SAP released its SAP ERP Pricing for the Digital Age which specifically included time management as a “document type” which would be licensed on an annual basis.  Since then, SAP has been relatively quiet when it comes to providing further clarity on how Indirect Access (now referred to as Digital Access) will be measured or enforced.

Any consideration of expanding your Kronos footprint via a purchase from SAP creates two opportunities to better understand SAP’s Digital Access approach:

  • First, you should obtain transparency from SAP regarding how/if your use of Kronos will trigger Digital Access.
  • Second, it is equally important that you obtain predictability not only of future cost but how SAP will measure compliance over time.

If you are a customer of SAP or Kronos, take advantage of this announcement by proactively engaging SAP on the advantages of this new relationship.  Leveraging an industry expert in SAP licensing practices can help prepare you for this discussion and position you to make informed decisions on your go-forward strategy with Kronos and SAP SuccessFactors.  But even if you decide to go it alone, this is something that should certainly be addressed.

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