SAP at Year End: Pitfalls and Opportunities

Michael Welsh
Nov. 28,2018 | SAP

December is the busiest month of the year for many suppliers, including of course SAP as they look to shore up, lock up, and secure their end of year financials.  A vast majority of SAP contracts renew effective January 1.  There are both opportunities to be had and pitfalls to avoid in this end of year run to 2019 and beyond.  Below we outline just a few things to look out for and encourage you to chat with us to make sure you are getting the most out of your agreements, investments and relationships with SAP.

SAP has its share of challenges.  There is discontent amongst its partners, customers, and previous cheerleaders.  SAP’s cloud roadmap is spotty (see our article: The Slow Road to Hana), they have and are suing their own customers over contrived or self-made issues like ‘Indirect Access’ and “run time” restrictions, (see our article: SAP Takes ‘Indirect’ Aim at its Customers) and may even be in violation of the U.S. Sherman Act and EU law. The list could go on, but if you are a customer you probably have your own examples of SAP’s monopolistic impulses driven largely by their organizational greed.

Here are 3 of the critical items that many of our clients are asking about this year-end:

  • Indirect access – SAP has tried to clarify with new terms for Order to Cash, Procure to Pay and Static read only access, which they say covers most of the impacted services. But these terms are still very confusing to many, and still don’t address major concerns many SAP customers have.  SAP marketed their April 2018 announcement as the magic elixir to solve these indirect access issues.  Of course, SAP’s answer required that customers purchase S4 which requires Hana.  Many SAP customers still don’t realize that their annual maintenance payments do not provide access to the new SAP platform without additional licensing (see more discussion below).  The other thing that many SAP customers don’t understand is that most of the typical indirect access use cases can be addressed with the legacy license model and do not require adopting S4 Hana.  If you have these concerns, we can help diagnose and address any issues in line with your business strategy including negotiation required with SAP. 
  • Maintenance and Support: We may be a broken record on this (article: SAP Maintenance and Support for the Zombie Hordes), but if you are paying SAP for support, you have to seriously question if you are getting value for money. Annual maintenance does not entitle SAP customers to the new S4 SAP platform without incremental licensing.  Legacy deployments are often stable and don’t require much if any meaningful support calls being logged with SAP.  Given this, every dollar spent with SAP on its annual maintenance and support services, is likely a dollar too much.  As we stated in our SAP end of year article last year: “…majority of SAP software investments are being directed towards S/4, and therefore, your maintenance service and support dollars are not going in large quantities to deliver further innovations for you, and most of the SAP deployments we have seen that do not have short term plans to upgrade to S/4 are highly stable, and thus the support investments you are making are at least doubly inflated.  The SAP maintenance business model is now officially broken, and with a little information about your environment and plan, we can show you how much you can save by considering alternative approaches.  Clients we have worked with recently have been experiencing savings of as much as 80%.”
  • HANA (or any) Migration: Hana became an imperative to SAP when they decided they wanted to stop being Oracle’s biggest customer (through resale of “run time” licenses). Hana, like its namesake in Hawaii, is a treacherous drive.  Hana is expensive to license and staff for and opens new license risks, solving SAP’s problem at its customer’s expense. Be forewarned before locking in to any forced migration arrangements.  Answer these first: 
    • Do you really have a business case with ROI to justify the move?
    • If you are going to do a completely new implementation, do you need to do that now?
    • Is SAP the right answer?
    • If so, do you want to buy into SAP’s next legacy platform?

If SAP is the answer, there is likely a more cost-effective way than SAP is currently pitching to you. 

If you are buying any new licenses before end of year or seriously considering a migration of any kind or questioning the value you are getting for your annual maintenance investments, contact us for a short conversation that won’t cost you anything, but have the potential to save you millions.

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