Government // Enterprise Architecture
Commentary
10/8/2009
12:11 PM
Bob Evans
Bob Evans
Commentary
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Global CIO: SAP Is Testing Flat-Rate Pricing For Large Enterprises

While the details are still unclear, flat-rate pricing is expected to allow large enterprises to have access to as much SAP software as they want for one fixed price, leading to more focus on value.

SAP has begun testing a flat-rate pricing model that could allow large enterprises to pay one fixed price for unlimited access to SAP software, according to a member of the company's Executive Board. While the company declined to elaborate, it's possible that such a scheme would eliminate annual support fees by rolling them into the single fixed price. Is SAP looking to grab first-mover status?

The comments from SAP Executive Board member Jim Hagemann-Snabe came via an exclusive interview with a German IT magazine called is report. I received a transcript of the interview in German and used Yahoo's Babel Fish for the translation, which is admittedly a little sketchy.

That lack of complete precision, along with SAP's position of declining to elaborate on Hagemann-Snabe's comments, means that our interpretation of specifically what the tests entail is still rather murky. Nevertheless, even with the less-than-perfect Babel Fish translation, it is unmistakably clear that SAP is evaluating some sweeping new pricing models for large enterprises—something I wrote about late last week in my "Will Oracle Or SAP Blink First On 22% Maintenance Fees?" column-- in the hope of having them use more SAP software.

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Two other significant points came out of Hagemann-Snabe's comments in the is report article: first, SAP is also evaluating new purchase models for SMBs, including one based on subscription pricing and options; and second, in 2010 Business ByDesign customers will be able to choose single-tenant or multi-tenant versions, with the former carrying a markedly higher price tag.

So here are the two key exchanges between SAP's Hagemann-Snabe and is report's Jurgen Frisch, via the Babel Fish translation from German to English:

Q. You want to develop the Flatrate offer, after which large-scale enterprises can use all SAP software for a fixed price. How looks?

A. Hagemann Snabe: We want to give the possibility to customers of concentrating more to the value of the software than on the price. So far the enterprises bought the solutions in small parts and led each mark price negotiations. This Kleinteiligkeit often prevented that they draw the full use from our software. The fixed price model replaces the Vorabinvestitionen by annual fees. The customers know the costs in advance and can that solution arrange itself, with which they obtain the highest increase in value. SAP again saves sales costs and can the incomes better calculate. We pass this advantage on to the customers in form of discounts.

Q. Do they plan fixed price offers also for the middle class?

A. Hagemann Snabe: That is difficult, because a fixed price offer counts itself only starting from a certain size. We compile however straight new economical offers for smaller enterprises. Our goal thereby are software subscription. I cannot call details in addition however yet.

The link to the full interview in German is here.

And here is the commentary about single- versus multitenant options, which came to me in English from an is report editor:

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