This is the first in a series of posts dealing with the SAP contract negotiation process.
SAP’s market dominance often leaves customers with little negotiating leverage. Companies that have a well developed negotiation strategy, an understanding of SAP’s typical concessions, pricing structure and contractual “pain points,” greatly increase their chances of successfully negotiating with SAP. The following are some key strategies to be aware of:
1. Deal With The Key Decision Makers. SAP’s legal/contracts department is divided into regional departments made up of specialized contract negotiators that typically have little authority to agree to non-standard concessions. They are governed by a strict approval matrix that requires them to secure approval from regional counsel or attorneys in Newtown Square. Dealing only with contract negotiators that are empowered to say no will prolong the negotiation process and will result in an agreement that is more favorable to SAP than to your company. Insist on dealing with someone that has the power to approve your contractual requests on the spot.
2. Negotiate All Components of the Deal at One Time. If you are negotiating both a software license agreement and a professional services agreement with SAP, it usually makes sense to negotiate both agreements at once. For SAP the most important component of the deal will most likely be the completion of the software license agreement. SAP many times will try to table the negotiation of the professional services agreement so as to close the software deal more quickly. By agreeing to this you lose any leverage you may have to secure favorable concessions in the professional services agreement as SAP’s incentive to provide you with concessions is essentially gone.
Negotiating with SAP can be a complicated and frustrating process. By carefully planning your negotiation strategy you are likely to end up with a reasonable agreement that successfully governs you relationship with SAP for the duration of the license.