SAP leads the market in offering simplified licensing and pricing policies, but its strategy of developing NetWeaver...
into a business process platform could result in more complicated licensing schemes in the future.
Cambridge, Mass.-based Forrester Research Inc., named SAP the market leader after studying the license complexities and pricing policies of nine ERP software vendors. The companies were measured on 65 criteria, using Forrester's Wave methodology.
While SAP rival Oracle Corp. had a more complex licensing scheme, Forrester gave it high marks for giving customers more flexibility and room to negotiate.
"People want an open bar on their licenses. They want all they can drink and there is a big disparity about what vendors want and what their clients are looking for," said Ray Wang, a senior analyst at Forrester.
Look for SAP to revamp its licensing and pricing policies in the future, Wang said. SAP plans to service-enable its entire suite, using its NetWeaver platform as the backbone of a service-oriented architecture (SOA).
"It's difficult to speculate on what SAP is going to be doing," Wang said. "The question is: How do you price for a business process and if some processes overlap, how do you get credit for that?"
The Forrester study did not take into account SAP's NetWeaver platform or Oracle's Fusion middleware stack, Wang said.
Currently, companies can follow three SAP licensing models: R/3 Enterprise, which includes ERP and portions of the NetWeaver technology platform; mySAP ERP, which adds full NetWeaver access, along with HCM and financials; and mySAP Business Suite, which features the full package, plus modules like customer relational management (CRM), supplier relational management (SRM), product lifecycle management (PLM) and supply chain management (SCM).
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While SAP still sells its R/3 Enterprise version, it is strongly urging customers to move to its mySAP release. While mySAP Business Suite is the company's broadest offering, it doesn't include SAP's xApps composite applications, the Exchange Infrastructure (SAP XI) for non-SAP applications or any new products SAP may roll out.
Oracle has created the right balance between capturing the complexity of business requirements and the flexibility of software lifecycle policies, according to Wang. Users have more flexibility than SAP in choosing the right licensing model, he said.
Oracle has also been more open with its price lists and licensing policies, posting them visibly on the Web, Wang said.
Microsoft is in the process of simplifying its overall pricing strategy, including its Great Plains software, which it acquired in 2000 and rebranded as Dynamics, according to Wang. Microsoft plans to launch a role-based pricing concept in 2010, he said.
License negotiating adviceWang said companies negotiating a new license need to go into discussions understanding their usage metrics. A negotiator armed with the knowledge of the number of total licenses currently being used and a projection of the future usage needs, will get the best and most valuable license deal, he said.
"It is possible to turn your vendor into a strategic business partner. It's almost a partnership at this point," Wang said. "If you don't understand your usage, how do you know if you over bought or under bought?"
Users negotiating an upgrade should be certain they know the credits available, he said.
SAP's user metrics include single user name and employee user. SAP defines usage-based metrics based on the industry software, with the intent of charging for the value delivered by the solution, according to Wang.
"The company tends to keep a moderate line on license discounts and maintenance is typically based on the discounted license cost and not the full list price, as in the case of some other vendors," Wang said.
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