SAP Contract Consulting: An Ongoing Process

The rule is: What comes before the contract is signed is just as important as what comes after. Many—if not the most important—questions only arise in hindsight, during actual operations. Admittedly, especially after a major transformation, it’s understandable to be tempted to consider the commercial project complete for the time being. The contracts have been signed, the terms negotiated, and the roadmap is in place. But a contract initially reflects the needs and expectations at a specific point in time. Companies continue to evolve. Headcounts change, companies are bought or sold, projects shift, and new requirements arise.

On the other hand, the SAP portfolio is also constantly evolving. With its new maintenance and support commitments, SAP is opening up new possibilities for companies that wish to continue operating their SAP systems on-premises in the future. This creates additional opportunities to review and optimize existing maintenance and support models in terms of costs, contract terms, and future requirements. How can future SAP innovations be evaluated from a business perspective? Does the contract we signed two or three years ago still align with the company we are today?

There are plenty of questions that come up during the current contract term. Take, for example, the employee in accounts payable who can’t figure out why the latest support invoice is so much higher than last month’s. How do you know when you’re going over your cloud subscription limit?

Additional subscription?

How should changes during the term of a contract generally be handled? When do contract amendments or sublicensing become critical? Is it possible to optimize a current contract? How does a change today affect the next round of negotiations? Such questions rarely have a one-size-fits-all answer. An additional subscription may be advisable, while an adjustment to the volume may become necessary.

At the same time, every change should be viewed in the context of the overall contract, because each adjustment can also alter the starting point for future negotiations. Commercial contract management, therefore, does not mean trying to prevent every change or avoid every additional euro. Rather, it means making informed decisions and understanding their implications over the entire term of the contract.

Expiration of the Initial Contract Term

Furthermore, most companies are unaware of what they need to consider as the initial term of their current cloud contract nears its end—and what happens next. At first glance, this question may seem trivial. In fact, it is one of the most strategically important issues in a cloud contract. With contract terms of three, five, or seven years, renewal seems a long way off at the time of signing. But the groundwork for renewal isn’t laid just a few months before the contract ends—it develops over the entire term. What volumes were originally agreed upon? How have actual needs evolved? Which services have been added? Which ones are hardly used? Which pricing and contractual mechanisms apply in the event of a renewal? What strategic alternatives exist?

Those who wait until shortly before the contract expires to ask these questions may find themselves having to make decisions under time pressure based on circumstances that arose years earlier. Renegotiating the contract should therefore be viewed not as a single round of negotiations, but as the result of commercial developments during the preceding contract period.

In a traditional on-premises environment, it was relatively easy to distinguish between the license portfolio, maintenance, and additional requirements. With the rise of cloud and subscription models, this logic is changing. This raises new questions: How will SAP cost management change after migration? Have we fully understood the implications of our new contract and support structure? What risks arise when there is a lack of transparency regarding subscriptions, usage rights, and actual usage?

The knowledge and experience gained from contract negotiations with SAP remain important for day-to-day operations. Collaboration with the experts should therefore not end after the initial contract is signed. Rather, it is advisable to transition the consultations into an ongoing process. Procurement consultants are familiar with the project history and the contracts and do not need to reacquaint themselves with the jointly developed strategy.

Having to search the SAP portal to find answers to everyday questions—only to discover, after a long search, general statements in a hidden section that don’t apply to your specific situation (or none at all)—is time-consuming and can be discouraging. Uwe Werner IT Procurement Consulting has recognized this need and is responding with two new support models: CarePack on-premise and CarePack Rise. The former is designed for SAP customers who continue to operate their system landscape on-premise and want to actively shape their maintenance and support strategy. CarePack Rise is aimed at companies that have already migrated to Rise with SAP or SAP ERP Private Cloud and wish to have ongoing access to the expertise of independent SAP procurement consultants even after the contract has been signed or the project has ended. In this way, the Walldorf-based company aims to provide its customers with continuous access to its SAP licensing and contract expertise. (Source: Uwe Werner IT)