1. | 1© 2011 UpperEdge
5 Things Every SAP Relationship
Manager Must Know

2. | 2© 2011 UpperEdge
Presenter Background
David Blake
President & CEO, UpperEdge, LLC
Company Overview
• IT Sourcing and Commercial
Advisory Firm
• Provides strategic advice,
relevant insight, and precise
market intelligence to IT and
strategic sourcing executives
• Sole objective is to ensure our
clients establish high-value,
best-in-class relationships with
their most important IT
suppliers
Bio
• 18 years experience within the sourcing
profession
• Specializes in the sourcing and
negotiation of enterprise software and
services agreements
• Last 8 years as a trusted advisor to
Global 2000 companies
• Hundreds of SAP deals
• Advised on over $10B in deals

3. | 3© 2011 UpperEdge
Agenda
• Premise
• SAP’s Growth Strategy
• SAP’s Go-To-Market Approach
• HANA
• Interdependencies and New User Types
• Evolving Complexity of The License Model
• Indirect Access
• Impact of Multiple Deployment and License Models
• Executive Summary

4. | 4© 2011 UpperEdge
• To effectively manage your SAP relationship, make effective strategic sourcing
decisions across the IT portfolio, and balance your SAP total cost of ownership
(TCO), organizations must understand the following:
1. SAP’s Challenges, Growth Strategy and Current Market Conditions
2. SAP’s Go-to-Market Approach
3. Interdependencies Between SAP’s Product and Pricing Strategies
4. Impact of Consistently Evolving Complex Licensing Practices
5. How most effectively to manage the SAP relationship
• Failure to understand SAP at this level puts organizations at a significant
disadvantage in proactively managing the relationship and the broader portfolio
 This typically leads to waste at the portfolio level, limited downstream sourcing alternatives,
and insidious growth of your SAP TCO
Webinar Premise

5. | 5© 2011 UpperEdge
• Seeks to be a €20B company by 2015
 Vision tied primarily to organic growth
 Multi-channel sales approach critical for execution
• Strategy to achieve this growth: doubling the
addressable market through innovation
• Driven by convergence: focused on 4 growth areas
 On-Premise Solutions (Core Business)
 On-Demand Solutions (Cloud)
 On-Device Solutions (Mobility)
 In-Memory Technology (HANA)
• SAP believes HANA is transforming the industry
 Not only is HANA an in-memory computing solution, it is the go-forward
centerpiece of everything SAP is doing in the 3 other growth areas
SAP’s Growth Strategy
2010 2015
$110 Billion
$220 Billion
Cloud
Mobility
In Memory
Computing/DB
BI/Analytics
Middleware
Core ERP
+ Suite
BI/Analytics
Middleware
Core ERP
+ Suite

6. | 6© 2011 UpperEdge
• Today: 20% of sales
through channels
• 2015: 40% of sales
through channels
• Drive platform adoption
• Opportunity for greater
coverage & deeper
customer touch points
• Reinforces importance of
having well understood
engagement model
Multi - Channel Go-To-Market Approach
Customers

7. | 7© 2011 UpperEdge
• HANA = “High Performance Analytic Appliance”
• Data is stored in-memory (RAM) rather than on a disc or database
 Integrated database and calculation layer which allows the processing of massive amounts of real-
time data in main memory – provide immediate results from analysis and transactions
 Replaces the role of traditional databases
 Application scenarios that used to take 2-3 hours take less than 2-3 seconds
• 5 Hardware partners: Cisco, Dell, Fujitsu, HP, IBM
 Standard BOM developed for HANA to help with hardware product parity
• HANA systems will be sold in small, medium, and large sizes
 90% or so pre-configured with remaining 10% of custom configuration left to HW partners to
address particular customer requirements
• Expect €1B in HANA pipeline by the end of 2011
• Extension of HANA through service packs
 Aligns with SAP’s stated goal of continuous improvement and innovation without disruption
What is HANA?

8. | 8© 2011 UpperEdge
• Besides the HANA machines or devices, there will be an impact to SAP
products in 2 forms
 All SAP products are being re-engineered to utilize HANA (On-Premise)
 New applications are being developed which will be delivered on the HANA Application
Cloud (On-Demand)
• Announcements on the App Cloud coming in September, with product ramp release to
be made in October
• Goal is to have 4 global data centers for HANA App Cloud over time –
some may be co-located
• Specialized applications will sit on top of HANA, such as Strategic
Workforce Planning
 Will also support transactional workloads
Extending HANA

9. | 9© 2011 UpperEdge
• Hardware pricing likely based upon a cost per TB
 For total solution costs, must add licensing costs and implementation
• Licensing costs only made on a per-customer basis as license model not
yet released
• 3 options for license model and pricing:
 Amount of data processed (current SAP license approach)
 Amount of business value; or
 Cost savings to customer
• One thing is clear, pricing model will not be based on the number of
processors as SAP wants you to use as many as possible
 Aligns with SAP’s goal of helping customers reduce the % of the IT budget that is spent on
legacy infrastructure
 Goal is to reduce those costs and capture an increase in the customer’s wallet
• Capitalize on trend of shifting investments from infrastructure to software solutions
HANA Pricing and License Model

10. | 10© 2011 UpperEdge
• HANA will eventually impact the core applications and their capacity and
speed to process big data, transactions, and analytics in near real-time
 Will be the cornerstone for SAP’s on-demand strategy (Cloud)
 Along with the NextGen Sybase Unwired Platform 2.0, will form the foundation for SAP’s
mobile solutions and on-device strategy
• HANA is impacting everything SAP does today, from product enhancements, to
new product development, to its go-to-market approach
• HANA’s processing capabilities provide an unprecedented anchor that can
thread an entire organization’s SAP landscape, resulting in additional SAP
product and user licenses as well as special licensing scenarios
 SAP will be aggressive to capture market share as fast as possible to plant this anchor
 HANA’s potential for creating value in the customer base is high – its potential
for significantly elevating the complexity of managing the SAP relationship is
equally high
Impact of HANA

11. | 11© 2011 UpperEdge
• As SAP introduces new products and functionality, they have a pattern of
requiring new user licenses for the new functionality and for the deeper reach
into your ecosystem
 Originally SAP BI could be accessed via professional and limited professional user licenses
 After the acquisition of BusinessObjects, SAP required new user license categories of Business
Expert User and Business Info User
• SAP is more than likely to develop new user license categories at higher price
points to reflect the increased value of having access to the new functionality
being licensed and deployed and the contribution across the entire value chain
 SAP currently maintains 12 different user categories which apply where your employees
access SAP functionality
 A subset of these can also be extended to non-employees in certain scenarios (indirect
access)
Interdependencies and New User Types

12. | 12© 2011 UpperEdge
Package Licenses
Priced by business metrics
SAP named users
Industry packages
Enterprise Extension packages
Enterprise Foundation package
SAP NetWeaver packages
SAP NetWeaver Foundation
SAPBusiness
Suite
The Cloud
(SAP Business ByDesign, LOB On Demand)
Mobility
(Sybase Unwired Platform, Afaria, Mobile Apps)
In Memory Computing/DB
(HANA, Sybase ASE, IQ)
Evolving Complexity of The License Model
Named User Licenses
Priced by number of users
• Platform adoption drives dependency which significantly expands
SAP’s reach into the customer ecosystem which is key for up-sell
and cross-sell opportunities
• It also elevates the likelihood of special licensing scenarios
regardless of the interface to SAP functions and data

13. | 13© 2011 UpperEdge
• Every SAP customer should understand indirect access rights
 Failure to understand and mitigate can promote significant cost growth and unbudgeted
expenditures
• SAP’s stance: License requirements are based on the utilization of the software
functionality independent of the technical interface used to access it
• Historically, SAP was vague and passive until learning of a specific scenario
Indirect Access
Custom-developed
application/3rd party
application
SAP Software
SAP
Platform
User
SAP
Application
User
SAP
Application
User
SAP Certified
3rd party
application
• SAP now has very affirmative licensing policies
and rules regarding indirect access
 Named user licenses are required for all users of non-SAP
software who indirectly access SAP software
Indirect Access

14. | 14© 2011 UpperEdge
• Think of the number of different ways in which you may collaborate on different
business scenarios across your value and supply chains (“Extended Enterprise”)
 Internal and external collaboration: Suppliers, Distributors, and Customers
• The licensing policies are very complex, and overall applicability will depend on
how your IT environment is structured
 SAP’s licensing and pricing model is meant to promote the replacement of third party products
with SAP products
 Further entrenches SAP within your organization and increases SAP’s share of your IT wallet
• As customers expand their SAP footprint and extend these and third party
applications throughout their entire ecosystem, new user licenses and support
fees will be required
 None of this changes with HANA, Cloud, and Mobility: This likely exacerbates the situation
• SAP’s licensing and packaging policies are structured to protect downstream
revenue opportunities and instill a “If not SAP, why not” mindset
Indirect Access: Why is this Important?

15. | 15© 2011 UpperEdge
• SAP has stated its 3 tiered product strategy since the beginning of 2010
 Provide the value of SAP applications and processing capabilities in any manner in which an
organization wishes to consume them
 On-Premise (Core business); On-Demand (Cloud); On-Device (Mobility)
• In-Memory technology (HANA) is the lynchpin to SAP’s product strategy as it ties
together all 3 deployment models
• Multiple deployment models allow SAP to penetrate deeper into a customer’s
ecosystem and impact more business units and people in a more meaningful
manner that previously capable
 Aligns with SAP’s goal of having 1 billion people using their software by 2015
• Multiple deployment models drives multiple license and pricing models which
ultimately elevates the complexity and overhead of managing the SAP
relationship
• Longer-term, it provides SAP the opportunity to promote one common cloud
based solution (“The suite always wins.”)
Impact of Multiple Deployment and License Models

16. | 16© 2011 UpperEdge
• Ensure there is a well understand engagement model and account management
plan in place with SAP
• Assess the quality, integrity, and strength of your SAP relationship
 Gather input of internal stakeholders, end users, and unbiased third parties who can provide
comparative perspective
• Drive and demand transparency in all your interactions with SAP
 Licensing, packaging, pricing, account navigation, downstream implications
• Gather intelligence, understand current market conditions, validate, and adapt
 Know SAP as well as they know you!
• Leverage all of the above as input for shaping your broader IT portfolio sourcing
strategies and plans
Executive Summary

17. | 17© 2011 UpperEdge
Contact: David Blake
dblake@upperedge.com
617.412.4335
For more information on UpperEdge visit:
www.upperedge.com
For strategic insights on IT sourcing visit:
www.upperedge.com/blog
Thank You
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