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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.

Jim Hagemann-Snabe, member of the Executive Board of SAP, told the German IT-magazine is report that in the next year Business-Bydesign-customers will be able to choose between a single tenancy-version running on a dedicated server and a multitenancy version, where they share the infrastructure with others. Both versions have different price-tags.

These new trials being run by SAP come at an interesting time. While SAP officials say publicly that their customers have no problems with SAP's current pricing model of license purchase plus annual support fees, that stance would call into question the recent strategies outlined by Hagemann-Snabe to test some radically different models.

And as I wrote late last week, there is—in spite of SAP's disclaimers—considerable unhappiness among CIOs about the volume and inflexibility of annual support fees from both SAP and Oracle. In that context, I suggested that the market is very likely to reward the first of those two companies that is willing to break with tradition and offer its customers a range of purchase and support choices and options.

So while it's unfortunate that at this time we can't get a crystal-clear translation of Hagemann-Snabe's comments, and that SAP has declined to offer any elaboration upon them, it is very interesting indeed to see that appears to be willing to at least consider claiming to seize that strategic first-mover status.

If SAP does indeed go ahead and expand these tests into full-blown campaigns, the focus on value instead of price to which Hagemann-Snabe refers will surely come to pass. And then we can all watch to see if Oracle decides to follow suit.

GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

To find out more about Bob Evans, please visit his page.

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