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10 ways to beat SAP at the bargaining table

Chris Kanaracus | Nov. 15, 2011
It's crunch time for SAP customers and salespeople around the world, as many new software deals and contract renewals get hammered out in the fourth quarter in time to be booked before the end of the company's fiscal year.

4. Don't expect the world if you're buying a la carte

"Sales and marketing is SAP's biggest cost," Jones wrote in his report. "If your enterprise wants to evaluate SAP product by product and site by site, then SAP will rightly price accordingly, basing its discount on each deal's size rather than your aggregate spend volume. You may end up paying double the price for the software compared with an enterprise deal, but that could be a price worth paying for the greater choice and flexibility."

5. Maintain degrees of separation

One of the tougher tasks facing IT shops and procurement specialists is keeping track of ever-growing piles of software agreements, and vendors will often suggest what seems like a painless way to simplify things.

Run away from temptation, according to Wang. "Whatever you do, don't bundle your contracts," he said. "It may sound easy, but it reduces your flexibility. Oh, yeah, you get one bill. But you're locked in."

6. Remember the big picture

Successful negotiation with SAP isn't all about beating the best possible discount out of a salesperson. On new deals, customers should secure contract terms that speak to the application's full lifecycle, from purchase to implementation to its eventual replacement, Wang said. They should also contemplate what-if scenarios. "What happens if I have a merger? What can I change?" he said. "This is stuff you want to have on day one."

Future-proof your purchases as well, Jones warned. Sometimes, software vendors phase out products and customers have to pay additional money for the successor, Jones wrote. But some SAP buyers have finagled contract terms "that allowed them to swap products in their bundle for any new products with equivalent functionality, thereby mitigating the obsolescence risk."

7. Only use the 'L' word if you're really serious

Salespeople at SAP are used to customers threatening to leave their company for another vendor, but such tactics only work if they're not an actual bluff. "I don't mean to be Dr. Phil here, but to get out of a contract you need to be ready to leave," Wang said.

Also, if a customer's relationship with SAP has gotten bad enough that a breakup is possible, it's not likely to be truly repairable, he added.

"At the end of the day, you still pay them. You're in control. You're never truly captive. It is your own destiny," Wang said. "But the first rule is don't get into a relationship with a vendor unless you believe they're going to deliver on their promises."

8. It can pay to be an early adopter

SAP has been rolling out a slew of new products over the past year in areas such as mobility and its HANA in-memory computing engine, and sales representatives are no doubt pushing all of them hard, hoping to get customers with stable core ERP (enterprise resource planning) systems to open their wallets as well as show market observers that SAP's strategy is clicking.

 

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