Negotiate, negotiate, negotiate.
Sorry for the teaser title but that’s the reality of the situation. There is no way around it. Every SAP ERP contract has verbiage in it about “definition of use”. Like it or not, you are required to have licenses to cover the various ways of accessing SAP, including indirect access. I covered that in my last post on the topic. How much you pay for those licenses is determined by how well you negotiate with SAP. It’s inevitable, you are going to have to negotiate with SAP for those indirect access license fees.
Today I’d like to prepare you for that negotiation.
First a word of encouragement.
SAP has always been open to negotiating Indirect Access License Fees. Granted, sometimes more so than others, but that’s the nature of negotiating. Unnamed sources at one of the industry’s leading analyst firms will tell you that generally everyone can get discounts and, under the right circumstances, significant discounts are possible.
So that’s the good news. It’s more than possible to negotiate your way through the morass of SAP Indirect Licensing. The “better news”, also mentioned in my last post, is that SAP is showing signs of becoming more “empathetic” and providing new and improved ways to define, and charge for, Indirect Access.
Win-win negotiating 101.
Now for the practical tips on how to negotiate with SAP…or anyone for that matter. These are taken directly from my favorite book on the topic, “Getting to Yes. How to Negotiate Agreement Without Giving In. ” by Fischer and Ury. The book is derived from their work at the Harvard Law School’s Program on Negotiation (PON) and should be mandatory reading for every human being who interacts with other human beings. Everyone who works at Corevist knows that it’s on the required reading list.
Here are the 3 most important concepts to master if you want to increase your odds of walking away with a deal that you are happy with:
- Know the difference between an interest and a position
- Have a BATNA (best alternative to a negotiated agreement) before you start
- Focus on satisfying interests as opposed to confronting positions
Focus on Interests not Positions
What’s the difference between a position and an interest? You can think of a position as the “offer” that is being presented while “interests” are the underlying personal or business needs that have to be satisfied in your negotiation. Here they are in the context of your SAP Indirect Access License negotiation:
- SAP wants to charge you $A_LARGE_SUM_OF_MONEY for every user that indirectly accesses your SAP ERP system.
- You don’t want to pay them anything.
- Your SAP salesperson is channeling the pressure from above. She not only has to bring in a significant amount of revenue for the company, but is being told that she has to sell certain products that may or may not be in your best interest, but are critical to the growth of SAP (S4/Hana, hybris etc.). She has a quarterly number to make. She also wants to maintain a good relationship with you…if at all possible, but that’s not necessary.
- You want to respond to the needs of your business. You have to offer an affordable solution to your B2B eCommerce requirements in a short period of time with your already overworked staff. The chosen B2B eCommerce solution has to take full advantage of all of the investments that you’ve made in your SAP ERP implementation. You also have to make sure that you don’t set yourself up for unpredictable, and unaffordable, future expenses as you roll the solution out to a larger number of users. You’ve already evaluated hybris and decided that it is way way way more complex than you need or want or can handle or can afford. You also hate feeling like you are being bullied into a corner with a gun to your head.
The process of win-win negotiating is focused on coming up with terms that satisfy both parties interests as opposed to confronting positions head on. If the first step is to identify those interests, the second step is to come up with your BATNA (best alternative to a negotiated agreement).
Have a BATNA
BATNAs are exercised when negotiations fall apart. While you enter a negotiation hoping that you and your negotiating partner leave the room together, a BATNA is the door that you will exit from if you have to leave by yourself. If you don’t have a BATNA you’re not negotiating. You’re just arm wrestling and you better hope that you’re stronger than your opponent if you want to win.
What possible BATNAs do you have when negotiating with SAP re Indirect Access License fees? It all starts with knowing your “line in the sand”: the total cost your willing to pay for SAP licenses. That number is derived from the business case for your eCommerce project and after considering other SAP related projects that are on your roadmap.
With that “line in the sand” number in hand, here are a few BATNAs that you might consider:
Accept whatever fees, or “strategic” applications SAP proposes you buy, and continue on with your project.
In the short run, SAP will wine and dine you like a hero. You should also be comforted by the fact that once you get fired from this job, someone at SAP might be able to help you get a job at another SAP client.
Buy hybris because SAP said that doesn’t come with Indirect Access fees.
Actually, that is not only not true, but it is illegal. In the coming weeks I’ll be providing the SAP community with a leading anti-trust lawyer’s opinion on the matter. In the meantime, take a selfie with the SAP hybris employee who issued that threat. It will have historic value some day. Oh, and ask her to put that in writing :-).
Create another solution that doesn’t require Indirect Access Licenses.
According to the Diageo case ruling, if you’re going to be updating SAP through a 3rd party application (real time or not), there are no technical Indirect Access License workarounds. The only workaround is to have a CSR, with a valid SAP license, rekey those orders.
Cheat and don’t tell SAP that you’re going to allow customers to illegally access your SAP ERP system.
Not cool. Don’t do it! Cheaters never win and winners never cheat.
Rollout your B2B eCommerce website to your highest value users. Those may be your salespeople or your non-edi using distributors. Even if you are a terrible negotiator and you have to buy the most expensive Indirect Access Licenses on SAP’s price list, you’ll be able to justify the cost by the value that it provides these users. You may end up buying dozens or hundreds of licenses, but you’ll also be supporting tens, if not hundreds, of millions of dollars of business. Hold off rolling out the solution to the rest of your lower value customers (hundreds or thousands of users) until SAP clarifies their Indirect Access policies and prices or you get a better negotiator on board :-). In the interim, you’re getting real business value and putting in place a platform that will support your rapid growth when the coast (or cost) is clear.
Do nothing. Otherwise known as kick the can down the road so that you can deal with it when you’re better prepared to, or leave it to someone else to deal with.
This is probably the most popular BATNA that I’m seeing in the market. It is the typical reaction to uncertainty. I guess if you’re living with phone/fax/email in 2017, you can wait until 2018 by which time this cloud will be swept away. Or is it that the cloud will sweep this cloud away???
Freeze SAP. Return all unused licenses to SAP, freeze all future SAP investments and transition to Rimini Street for product support.
10% of our clients have adopted this strategy so it’s a very real BATNA. At the very least, I think every SAP client should have a conversation with the folks at Rimini street and explore the possibilities. There is a lot of money to be saved here that can be applied to better use in your IT organization. If SAP isn’t going to be a strategic partner to your business, as difficult as it may be to admit it, you may need to prepare yourself for a divorce.
Migrate to Oracle
No guarantee that life is going to be any better with Oracle or Microsoft or XXX. I guess the good news is that you probably have job security for another 3-6 years while you navigate the migration :-).
Go to court with SAP
Not a bad idea if you’ve got deep pockets and you’ve got someone in the family who is a lawyer.
So that’s it. You’re ready to negotiate.
You’ve got all the facts about your current, and desired number of, Indirect Access licenses that you want to buy and negotiate a price for. You’ve come up with your BATNA and you know what will trigger it during your negotiation. All that’s left is to leave your animosity towards SAP for putting you in this position at the door and work towards coming up with a solution that will address everyone’s interests.
My next blog post will list some resources that you might find of value as you continue to deal with this issue.