SAP's Published On-Demand Pricing

It appears SAP is taking a move from Oracle's playbook when it comes to becoming more transparent with its On-Demand pricing and discounting: at the Influencer Summit last week, SAP shared a number of pricing details around its On-Demand products. As an example, consider SAP's approach to pricing its On-Demand E-Sourcing offering (not including contract management or supplier management, mind you). For its "standard offering," SAP pricing starts at 300 euros per month for primary users ("sourcing-event owners" in SAP-speak); other users are free. Sourcing-event owners have, in SAP's words, "full access to the features listed in the functional package [including the ability to] create, edit, and delete sourcing event information." Pricing for the standard offering drops to as little as 30 euros per month per seat for each sourcing-event owner above 250 users.

The E-Sourcing premium offering, which includes additional capabilities and features, starts at 500 euros per month and drops to as little as 50 euros above the 250-user threshold. These prices are exclusive of a number of other fees, including a one-time platform set-up fee as well as implementation fees. There is also an additional, yearly fee for those customers who want a single-tenant instance (as opposed to a public multi-tenant one); to date, only 20% of customers have chosen the single-tenant option.

From a licensing perspective, SAP offers a degree of flexibility not often displayed by large providers. For example, it is willing to sell a single-user license for a period of only 3 months (standard SAP On-Demand contract periods are 3 months, 6 months, 1 year, 2 years, and 3 years). Multi-year discounts are available: customers who sign up for 2 years of service receive an 8% discount; 15% for those who sign up for 3 years. Additional discounts are available for those organizations that purchase multiple On-Demand products (e.g., Contract Lifecycle Management and Supplier Management). Discounts run at 10% and 15% for two and three On-Demand product-line licenses, respectively. Pricing for SAP's other On-Demand solutions, Contract Lifecycle Management and Supplier Management, come in at slightly lower pricing than E-Sourcing; I'll cover these in a subsequent column.

But in general, how does SAP's On-Demand pricing stack up against the competition? The answer will vary depending on the deal. For a low number of seats, SAP's pricing is quite competitive and, in some cases, lower than rival best-of-breed vendors. But organizations that climb above a few dozen seats might find SAP's competitors (not to mention SAP's BPO partners, who sell the same solution) more competitive, at least on list pricing. (We all know this is only a starting point in any negotiation, however.) If you really want to know how low SAP will go with its E-Sourcing pricing in larger deployments, my suggestions is to put it up against others (e.g., Ariba, Iasta, Emptoris, BravoSolution, Oracle, Zycus, etc.) and to use a reverse auction or another online sourcing negotiation format -- ideally with a non-SAP sourcing tool just to show SAP that you have other options.

Jason Busch

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