How to Strengthen Your Leverage in SAP Negotiations

SAP runs mission-critical systems for the world’s largest enterprises. Not coincidentally, it also runs one of the most complex and unforgiving commercial models in enterprise software. Between shifting licensing metrics, opaque audit tactics, and contracts designed to keep customers off balance, even seasoned procurement teams struggle to stay ahead.

This post unpacks how the vendor keeps leverage on its side, and how customer can take it back during SAP negotiations.

Understanding the Core Problem with SAP

At the heart of the issue with SAP is their control over the licensing landscape. They define the rules of engagement, tailoring licensing models, metrics, and names according to their strategies.

This flexibility means SAP can change the conditions at any time, making it difficult for clients to fully grasp their commitments and obligations. As a result, many customers feel overwhelmed and concede to the complexity that SAP intentionally introduces into their enterprise agreements.

Licensing and Compliance Traps are Part of Their Strategy

SAP’s strategy involves using complexity as leverage, often employing information asymmetry to maintain an advantageous position. Here are a few traps to be aware of:

User Classification Complexity

SAP requires businesses to classify their users, which becomes a leverage point during audits. For instance:

In basic audits, SAP relies on the law report, counting users based on the validity date in the user master table, often leading to over-counted licenses for inactive users. But in enhanced audits, the focus shifts to user authorizations, which involves scrutinizing user activities without clear guidelines from SAP, causing potential misclassification risks.

Vague and Confusing Licensing Metrics

Let’s start with Full User Equivalents (FUEs). Cloud FUEs are not a 1-to-1 conversion from Named Users. As customers migrate to S/4HANA, many are finding the conversion from on-premise to cloud is leading to unexpected cost-overruns.

SAP’s licensing metrics are diverse to say the least and they change frequently. Moreover, outdated metrics or changing licensing models can lead to compliance violations. Additionally, self-declaration exercises for measuring usage lend themselves to over-declaration risks, primarily due to misunderstandings of complex metrics such as ‘cores.’

Indirect or Digital Access

This one is significant. Digital access represents SAP’s model to monetize automated processes connecting external systems to SAP. The challenge arises from the unpredictable growth of automated document creation, often leading to compliance risks and shelfware, particularly when SAP’s Digital Access Note overcounts document usage.

Inaccuracies – both in count and rule interpretation – is exceedingly common as SAP assesses Digital Access across a customers’ SAP estates. When we analyze SAP’s findings, we typically find errors that save clients 20 to 60%.