10 ways to beat SAP at the bargaining table

IDG News Service - 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.

But this is far from a season of confrontation, according to SAP.

"We work with our customers so that they fully understand the unique value and innovation of SAP software as well as the return on investment it brings," spokesman Andy Kendzie said in a statement. "Our goal is to build long and meaningful partnerships with long-term value for customers. We believe they understand this when they look at contract renewals."

Customers may have little luck getting SAP to budge on some things, particularly those lucrative annual maintenance fees. Still, here's a look at some steps they can take to ensure they get the best possible deal, both now and in the long term.

1. Look to gain value from your existing investment in SAP

"If you're in the middle of [negotiations], the best things you can do to arm yourself is actually figure out what your usage is," said Constellation Research CEO Ray Wang, a veteran SAP contract negotiator for clients. "Basically, try to figure out are we using [licenses] to the fullest or do we need more?"

It might be possible to drop some licenses, although it's undoubtedly more advantageous to build that option into the original contract. A second alternative would be to move unused licenses to some other application that might actually provide value for your business, Wang said.

2. Make those salespeople work for their money

An old cliche in enterprise software sales is a salesperson who dazzles a customer in order to make the big sale, but then becomes exceedingly scarce, at least until next year when they try to sell you something else.

This isn't acceptable, according to Forrester Research analyst Duncan Jones.

"You want an account manager focused on ensuring your success and solving problems, not searching for new revenue opportunities," Jones wrote in a new report on SAP contract tips. "So make it part of the deal that SAP reflects aspects such as product adoption in the account team's compensation."

3. Bulk purchases make for the best discounts

CAD software maker and SAP user Bentley Systems is not currently negotiating with the vendor, "but in the past we would find that we always got the best deals by accumulating multiple product purchases and negotiating hard, down to the last minute," said Tim Birnley, director of enterprise applications.

"When SAP changed their [compensation] plans for the sales guys, this impacted the timing of deals, significantly," he added. "You will now likely get a better deal in November, than December, so that SAP can be sure to recognize the deal this 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."