What This Article Covers
- How We are So Different from other IT Media Entities
- Inappropriate Constructs in IT Decision Making for Companies Using SAP
- Getting The Real Story on SAP?
- Is SAP Strip Mining is Customers?
- The IT Department and Consulting Company SAP Bias
- How Much Do You Know About SAP?
- The Brightwork SAP Information Alliance
- Our Work With the New SAP Construct
- SAP Licensing and Terms
- SAM Software Knowledge Support
- Improved Clarity on Indirect Access
- SAP Intelligence
- Negotiation Reference Support
- Our Global Support
- A Simple Yearly Subscription
- How Membership Fees are Determined
Does this scenario above too often feel like you dealing with SAP? If so, you are not alone.
You may have noticed that the articles and writing on this site is different than most?
In most cases, the large IT media outlets will go to a SAP vendor’s press conference and repeat items verbatim that they heard at the event. This makes some these outlets nothing more than copy machines for the most powerful entities.
- These types of trade publications do not follow the normal journalistic or research standards that apply to either standard media outlets much fewer research entities.
- Entities like Gartner maintain a pay for play system where they move software vendors up or down based upon how much income they can extract from them.
This is the reality of the enterprise software media market, and the are very few articles or books that even describe the issue. The writers at the major IT entities are often easy to fool. Many of those that write on enterprise software have never implemented software or touch the software that they write about.
As the most prominent entity that studies SAP’s marketing output, it often seems as if SAP marketing lives in a virtual reality that has little to do with what actually happens on SAP projects. SAP can rely upon a line of surrogates, from Deloitte and IBM to ComputerWeekly, all that are pro-SAP due to financial ties to SAP.
Getting The Real Story with SAP?
Our primary focus area is SAP. We have identified the fact that SAP is now a legacy system at its customers. What is a legacy system?
What is a legacy system? Well, it is a system you have relied upon historically, but which you are trying to minimize the investment into as you migrate to something more to “your liking.” This is covered in the article How SAP Used and Abused the Term Legacy.
As is covered in the article How SAP is Now Strip Mining its Customers, SAP is now legacy.
Is SAP Strip Mining is Customers?
Back in the 80s SAP marketed against legacy systems. SAP, along with Gartner and all of the major and most the minor IT consulting companies told potential customers the following:
- ERP systems would eliminate all homegrown legacy systems with a single system.
- ERP systems would be the only systems that these companies would ever need.
As this period predates my career, I learned of this in what I can only describe as hidden history from my research for the book The Real Story Behind ERP. All of these entities (SAP, Gartner, the consulting companies) were amazing inaccurate in their predictions on ERP. And, each of these entities communicated these unproven messaging without worrying about compiling a shred of evidence.
- In fact, my review of all the research into the productivity of ERP systems revealed that there was never any evidence for ERP having any return on investment.
- While fabulously wrong, the biggest proponents of ERP, were also its major beneficiaries.
SAP has used its ERP system to push customers to buy more systems from SAP. However, after customers purchased the ERP system, they faced a diminishing marginal utility from each additional SAP purchase. There is a strong trend at play here and it has been largely ignored. But the more the company invests into SAP, the less they incrementally get out. That has been the reality for the past few decades. And now, there are now increasing liabilities to maintaining or growing one’s SAP footprint. Costs continually rise, and any company is now potentially subject to an audit, and to indirect access fees that in most cases would never have been actionable at the time the SAP software was purchased.
The question now is not whether to grow your SAP investment but how to shrink it.
Constructs and assumptions are important to decision making as they shape the limitations within which decision making occurs. With SAP, customers are constantly using inaccurate assumptions because they are misinformed by large consulting companies that are leading SAP customers to decisions that are good for the consulting company, but bad for the customer. Most SAP consultants don’t even work for SAP, they work for consulting companies that serve a consulting arms for SAP.
Inaccurate Constructs in IT Decision Making for Companies Using SAP
This basic concept is followed by most SAP IT shops but it actually inaccurate, but which was always exaggerated, and it goes something like this.
SAP is a leading software vendor. We rely upon SAP’s new products to improve our IT capability. SAP’s applications are not always the best, but they connect back to the “mothership,” the ERP system. And we can trust our IT department to look out for the interests of our business. Therefore, whenever possible we will buy SAP.
This construct has been leading to bad IT software decisions at companies using SAP for over twenty years. The downsides of relying upon this construct are about to get worse. Here is why:
- Post-ERP Applications: SAP’s non-ERP applications have not been value-added to companies that implemented them. And we have several decades of data points on this fact.
- S/4HANA and HANA: SAPs new ERP system S4 is not compelling and its new database, HANA is not differentiated from the competition.
- SAP Support Decline: SAP support has dramatically declined in the past ten years and is now mostly outsourced to the lowest cost countries, pushing the maintenance burden to SAP customers. SAP now expects a 90% margin on the 23% basic support that it charges customers.
- SAP’s Constant Trickery and Shenanigans: Lacking the ability to meet Wall Street growth demands, existing SAP investments are increasingly a liability. The reason for this is SAP has set financial objectives and communicated goals to Wall Street that it cannot meet. Oracle is in a similar boat. These are two enormous companies who’s best days are behind them. In the 1990’s, the demand for SAP’s software was so strong that many SAP salespeople would not even talk to a prospect unless they already had a purchase order. That means at that time, SAP’s software was selling itself. This is no longer the case. When a company reaches the limits of growth, and if they have the ability to do so, they use their power, size and legal muscle to use indirect access to either receive monies for ERP licenses or arm twist purchases of uncompetitive applications. Microsoft does this, and IBM does this, and they were somewhat ahead of SAP and Oracle in their lifecycles.
This construct that is reinforced by companies using SAP by both the IT department within the company, and by the consulting company without. In fact, as the best decision becomes to migrate or diversify away from SAP, the IT department and the IT consulting companies push in the opposite direction from this.
Many of the decisions made in favor of SAP simply don’t make any sense. This brings up the question of to whom do many decision makers in IT actually owe their allegiance, to their employer or to SAP.
The IT Department and Consulting Company SAP Bias
Many IT departments place SAP above the interests of the business of the company they work for. This observation has come from many years of interacting with IT departments at companies using SAP. I have presented to numerous IT organizations over the years the problems with various SAP applications that they purchased, and I am invariably told that.
“The thing is Shaun, we are an SAP shop.”
Therefore, SAP customers should be on notice that your IT department will in most cases lack sufficient independence from SAP to represent the interest of the company they work for, and by the way, that pays their salary. It is true that the IT decision makers in SAP shops, frequently have more loyalty to SAP than they do to their own employees. The concept among many in IT being that employers come and go, but you can always get a job if you have SAP on you resume.
- The IT Department: The IT department and IT consulting companies had somewhat of a role, will now increasingly serve as a barrier as the reduction in investment from SAP begins.
- Large IT Consultancies: As for the large IT consulting companies. They have hundreds of thousands of SAP consultants and investments in SAP and revenues from SAP. For a large IT consulting company the only advice they provide is to invest more in SAP implementation. The large IT consultancies have a business model to protect, and it will be protected. These companies are a major liability. Given this environment, what is the value of that advice exactly?
The Brightwork SAP Information Alliance
The Brightwork SAP Information Alliance (BSIA) is a membership program that is a program where Brightwork shares information from many different SAP projects, tracking how SAP is rolling out various policies
- Negotiation depends on several factors. One is the quality and experience of the negotiator. Another is the quality of information on the topic being negotiated. BSIA helps with both of these areas. The better you are able to negotiate with SAP on indirect access, licensing and other terms, the more budget is available for you to do innovating things with it.
- Managing SAP cannot be optimized without also understanding SAP software. This includes SAP’s roadmap and the probability of SAP meeting this roadmap (or perhaps even changing the roadmap)
Negotiation Reference Support
We are primarily a research, publishing and information sharing entity. Yet, we provide both the support and information that can be used in a negotiation with SAP and we have also partnered with specialized SAP contract negotiation entities. The reality is that if your customer or prospect faces an indirect access claim from SAP and they don’t have appropriate representation, SAP will take far more out of the account in license dollars, and therefore implementation dollars and will be far less willing and able to buy from you. SAP has the highest TCO across all of the software categories in which it competes. A single $1 in license sales results in a higher multiple of implementation and maintenance expenditure than any other vendor. SAP has a specific way of bringing an indirect access claim and a way of managing the timeline that puts their customers into disarray. And after the conclusion is reached, the presentation (in most cases) will be that the customer purchased the SAP software of their own free will.
The Beneficial Outcome: All of the negotiation reference support is covered as a part of membership. If the issue results in the need for an actual contract negotiation entity, then this is where we refer the client (thought you) to an entity that they can leverage that is the best fit for their needs. The client would then engage the negotiation entity directly.
SAP uses the confusion and complexity around its licensing to push customers into purchasing SAP licenses that in many cases the customer does not want or does not need.
SAP Licensing and Terms
- Most SAP customers poorly manage their SAP licenses.
- Customers have IT departments and procurement departments that are normally over-matched when it comes to dealing with SAP license management complexity.
- They lack the bandwidth in most cases to even properly measure their license usage, and unlike most other vendors that tend to be far more lax on how their software is used.
- SAP requires companies to run a yearly report on the system that provides some, but not all usage to SAP. For instance, SAP cannot, presently, see indirect access usage as part of this report (this may change in the future). The customer usually cannot make heads or tails of this transaction.
The Beneficial Outcome: The more that the customer knows it’s SAP license position, the more budget can come available for the purchases of other software. As part of membership, you not only get support on SAP licensing for what we know but also access to new questions that are beyond the normal types of questions and get into new scenarios. We have access to this information through our partners with specific domain knowledge in SAP licensing and terms.
SAM Software Knowledge Support
Part of getting your customer or prospect in better negotiation footing is using a software asset management application. This is the software category called SAM, and it is the software category that SAP wishes their customers did not know about.
Beneficial Outcome: When you join we provide you with information within the context of SAM vendors on which we provide independent information.
Clarity on indirect access is difficult to find, and SAP is deliberately secretive and opaque on this topic. Most of SAP’s direct statements on indirect access are confusing and not representative of SAP’s policy. SAP employs surrogates, like ASUG (the SAP user group) that disseminate in published form, and in oral explanations at ASUG conferences, information that SAP would like communicated. This topic is covered in the article Is ASUG Lying About the Frequency of SAP Indirect Access?
Improved Clarity on Indirect Access
What SAP customers would like to achieve is clear guidance from SAP on how indirect licenses work with examples of how and when they would and wouldn’t apply. SAP is deliberately vague on the topic so no customer knows what their exposure is. This allows SAP to suggest in individual situations there might be an issue and this is often enough to frighten the customer and influence their purchasing decision. SAP does this on purpose, so while clarity cannot be determined from SAP’s statements, it can be determined, probabilistically on the basis of previous indirect access behaviors.
The Beneficial Outcome: Perfect clarity from SAP on indirect access is not possible. But through the evaluation of real case studies on indirect access taken globally, the pattern becomes apparent.
Customers can gain access to a number of SAP areas of expertise that intersect with but are actually different areas of study separate from indirect access.
In addition to indirect access, Brightwork Research & Analysis has the largest and most accurate database of SAP material related to the actual capabilities of SAP versus the stated capabilities of SAP’s software. For instance, we were the first and the most comprehensive to debunk much of the marketing claims around HANA and S/4HANA, the first to produce reality-based research into the actual implementation results from S/4HANA (one example being What is the Actual Performance of HANA, and Which is Faster HANA or Oracle 12c. Our projections have held up quite well.
We spend a great deal of time and are well known for evaluating SAP software and SAP media output.
- SAP Project Exposure: In addition to decades of SAP consulting experience, we consult and visit and review SAP accounts where the observe the actual usage of software versus the sales proposals as to how the software would be used.
- 100% SAP Focus: We focus entirely on SAP and are one of the few entities to actually objectively analyze SAP rather than simply agreeing with SAP’s media output and promoting SAP.
- Combining SAP Product Knowledge with Indirect Access: This capability is inherently related to SAP indirect access as indirect access is always specific to an SAP application, and requires both knowledge of indirect access, licensing as well as the current and projected state of the application.
The Beneficial Outcome: Competitive intelligence is included as part of the membership.
Membership in BSIA means the same support not matter what the region or where the prospect.
Members can receive support to any geography. Our access to global case studies on SAP behaviors allows us to observe patterns by providing more data points. SAP tends to apply policies like indirect access similarly across regions.
One the other hand, the support can also be limited to a region or subregion if the larger company does not have the interest to be a member of the BSIA and if only one region or one subregion is interested in membership. The price adjusts accordingly to the expected number of salespeople supported. Membership can also begin at a region or subregion and then expand as the region or subregion first sees the value to working with the BSIA.
A Simple Monthly Subscription
When you sign up for a monthly, you receive all these benefits, and you get to test the benefits using this “SaaS” model. We operate to facilitate information exchange and provide expert prospect indirect access support as well as related SAP competitive information. A monthly subscription was the chosen method of payment as it does such a good job of tying the incentives of the buyer and the seller.
The Beneficial Outcome:
- Access: It allows all BSIA members to access the membership benefits at any time.
- Stability for Investment: It provides us with the stable income to continue to invest in the necessary research and capabilities to support our members.
- Price Clarity: It allows members to know exactly what they will pay per month and to add it to the budget.
- Low Maintenance: It eliminates the issue of maintaining, verifying and approving hours (or tracking exactly which salesperson accessed the membership at a particular time).
- Member Flexibility: It allows termination if the value is not what the member anticipated or if their budget it reduced, or if other things change.
The fees for membership are based upon revenues for the following reasons:
- SAP Customer Size and Subscription Cost: The larger the SAP customer (other things being equal) the more theSAP customer stands to gain from being part of the membership.
- SAP Customer Size and Consumption of BSIA Resources & Time: The larger the SAP customer, the more time is consumed on the part of the BSIA staff in answering queries, supporting indirect access claims and otherwise providing services.
- Due to the differing sizes of software SAP customers, it is not feasible to develop a schedule that accounts for each SAP customer is fair to both the SAP customer and to us. For this reason, we price based on an interaction you based upon the factors listed above.
The Beneficial Outcome: The membership fee is customized to the SAP customer to allow it to be recoverable several times over through improving the likelihood of not losing deals that have already been won.
Next Steps After Obtaining a Membership from Us
The BSIA is not a passive membership entity. Being a member of BSIA puts resources at your fingertips for IA. We see SAP customers miss out on opportunities because they too often accept the statements provided to customers because they are not able to fact check them.
Upon membership, the following steps occur:
- Introductory Conference Call: Introduction to the resources that BSIA has to offer, including articles, research areas covered, contacts, etc.. That takes place over a web conference.
- Communication of BSIA Contact Details to Your Team: Here the member sends out an internal communication within your company with BSIA contacts and explanation to appropriate internal parties related to BSIA. At that point, we can be the contact for SAP questions for your salespeople.
- Dealing with Urgent Issues: If you have a pressing indirect access challenge you are facing, you can begin using BSIA resources as soon as your membership application is accepted.
If you have any questions about BSIA, reach out to us at [email protected].