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How to Negotiate Your Enterprise Software Agreement Why can’t we all just get along…. Nancy Gendron Vice President, AMR Research Contract Negotiation & Benchmarking Service. Confidential. © 2002 AMR Research, Inc. www.amrresearch.com. Agenda . What’s New in the Negotiation World?

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slide1
How toNegotiate Your Enterprise Software AgreementWhy can’t we all just get along….Nancy GendronVice President, AMR ResearchContract Negotiation & Benchmarking Service

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

agenda
Agenda
  • What’s New in the Negotiation World?
  • Current Customer and Vendor Focus
  • SAP Negotiation Challenges
  • What About Everyone Else?
  • Customer Responsibilities
  • Closing Thoughts

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

2

what s new in the negotiation world
What’s New in the Negotiation World?
  • Revenue down / Valuations down
  • Fewer opportunities
  • Higher project scrutiny and approval process
  • Unforeseen events and economic uncertainty causing project delays and cancellations
  • Significantly reduced customer risk tolerance
  • Yet, there has never been a better buyer’s market

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

3

software vendor focus
Software Vendor Focus
  • Revenue recognition
  • Expand footprint in the base
  • Provide creativity only for significant commitment
  • Respond aggressively to competitive situations
  • Execution of Software License Agreement
  • Revenue recognition

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

4

customer focus
Customer Focus
  • Reduce cost and level of up-front commitment
  • Increase ROI
  • Leverage the enterprise and current market conditions
  • Play vendors off each other
  • Job security

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

5

sap r 3 traditional user community
SAP R/3 - Traditional User Community

SAP USER TYPES

- Operational - Information

- Requisition and Confirmation - ABAP

SAP R/3 FUNCTION BLOCKS

- Financial /Accounting

- Cash Management

- Funds Management

- Investment Management

- Controlling

- Project System

- Materials Management

- Plant Maintenance

- Sales & Distribution

- Production Planning

INDUSTRY SOLUTIONS

NEW DIMENSION

6

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

sap r 3 pricing
SAP R/3 Pricing
  • Defined value by looking within the enterprise
  • Price based on users and various levels of access
  • Extended price for New Dimension products as an add-on component

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

7

r 3 to mysap com financial issues
R/3 to mySAP.com Financial Issues
  • New license metrics
  • Re-price the Enterprise
  • R/3 Migration Credit
  • Revise Terms and Conditions

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

8

mysap com the new enterprise
SAP USER TYPES

- Professional - Employee

SELL SIDE

mySAP.com

BUY SIDE

- CRM

- SCM

- SRM

- PLM

- HR

- Financials

- BI

- Portals

SUPPLEMENTARY SOLUTIONS

INDUSTRY SOLUTIONS

mySAP.com - The New Enterprise

Engines

Bolt-on

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

9

mysap com pricing
mySAP.com Pricing
  • Bundled product approach intended to “win” the enterprise
  • Re-defined pricing approach to account for collaboration with business partners & customers
  • Established engine pricing as a method to capture value and secure future revenue stream

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

10

what about everyone else
What about everyone else?
  • Oracle - Wrote a Price Book
  • i2 - “Let’s make a deal”
  • Siebel - “Our way or the highway”

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

11

negotiation scorecard
Negotiation Scorecard

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

12

customer responsibilities
Customer Responsibilities
  • Accept that it’s not all about price
  • Require your team to educate themselves on the changing business practices of all your key partners
  • Define and follow your own rules of engagement
  • Remember the key to project success is in your implementation deal

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

13

closing thoughts
Closing Thoughts
  • Customers must exercise vendors to think about pricing in the context of utilization
  • Don’t believe everything you hear
  • This will never be this easy again
  • Every company needs to increase its System Implementation negotiation sophistication
  • Speed kills

Confidential

© 2002 AMR Research, Inc. www.amrresearch.com

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