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Contract Complexity – Is your SAP contract fit for purpose in the 21st Century? (part 2)

What do I mean by fit-for-purpose? If you signed a contract 25, 20, 10 or even 5 years ago, your contract is most likely out of alignment with your advancing business and SAP software road-map, and desperately needs modernising. I’ve written this article based on experience of working on SAP contracts across the globe and it is a subject dear to my heart, as I am seeing more and more issues, particularly risks you may have overlooked in old contracts. It is a great time of change driven by three major events.

  1. SAP support for ECC6 will end in 2025 so you should either inflight or planning your replacement to HANA and S/4 HANA or C/4 HANA as part of your SAP Innovation Journey.

  2. As outlined in article No 1 in this series there are decisions you need to be making between Direct Access and Indirect Use for integrating non-SAP software.

  3. You may also be embarking on a full digital transformation journey which is a radical change from the past for your business.

Have you considered the associated licencing and operational implications on any of these events, based on your numerous historical documents making up your SAP agreement?

All of these changes will have a huge positive impact on your business and in the early planning stages you should take the Contract and Licencing impact into your plans. It’s also the best time to revisit your whole licence estate and bring it into the modern world for your business, so that it is truly fit-for-purpose for the future.

Does the past matter?

If your SAP Licence & Maintenance General Terms & Conditions (GTC) were signed more than a few years ago then you have probably signed subsequent SAP Order Forms with many amendments imbedded within these additional documents, affecting both the GTC and previous Order Forms. In total this can amount to 100’s and even 1000’s of pages with the associated changes all but overlooked.

Importantly there may be ambiguous, amendments and modifications, most of which have not been properly tracked and managed in your operational use of SAP’s software. For example, the amendments which are legally binding, might include Usage Limits and Restrictions, and many more subtle changes.

In parallel, over the years you have had a turnover of people in IT, Procurement and Legal, responsible for your contracts and their compliance, who most likely will not have successfully transferred any knowledge that had accrued in this area to their replacements.

Many of your contracts may have had SAP Use Rights (SUR) added, again often missed, which was not originally in your GTC. This adds significant complexity to your agreement as it is updated regularly and you will end up with multiple different versions which you have to contend with.

So does this matter? From our experience this matters greatly, even if you are standing still in terms of system upgrades or replacements. However, the chances are that you aren’t standing still, you are advancing at a rate of knots, in order to maintain or increase your competitive market position, meet regulatory demands or simply because the blue touch paper has been lit and the fuse is burning, to become fully digitised. This might be 5 years away, but in terms of coping with all the colossal changes necessary to Architecture Design, Business Processes, Security systems and implementation it’s not really very long at all!

Mitigate the risk

The greater risk is in the uncertainty, and unbudgeted management time and cost of doing nothing, which we suggest should not be an option. If you do all of the groundwork as suggested above and bring the four key stakeholders (Legal, IT, Procurement & The Business/Finance) together by mutual understanding, then you would already be a lot of the way towards achieving the necessary change.

How to do it?

This is not a retro-fix to a few contract clauses or simply a means to an end, but an enduring key component of your Business and it’s associated supporting SAP journey for the future. You can’t easily predict the detailed contractual and Licence metrics required for your future journey, several or more years ahead. However, armed with the right data, information, knowledge and skills, you can convert all of this into wisdom, which can then be adjusted or even modelled, based on an effective plan.

By this I mean you can create a complete model of all the key outcomes and possibilities against which you can sensibly make crucial decisions and empower your organisation to achieve success in a significant change in your SAP Agreement. Critically, this modernised agreement will be both aligned with today’s needs and flexible enough to maintain that status in the future, almost no matter what happens with your business and the supporting IT and Solutions architecture.

We have worked with customers to do this, so we know what is involved, what it takes and when and how to execute, and in advance we will set your expectations for what is realistically achievable, but it is possible to gain great advantage for the future.

With the right stakeholder commitment fuelled by your planned investment in SAP, we have helped companies completely transform or replace their SAP Agreement. This will simplify them and embrace real future-proof usage flexibility, in line with the inevitable twists and turns that your business will be subject to.

What’s in it for your Business?

A wonderful opportunity to bring clarity to your agreement making it far less cumbersome to interpret and manage. Eliminating risks and identifying opportunities. Also you will save a great deal of management time, especially in gaining sign-off for Business Cases to enhance your SAP systems over time. Staff changes will have less impact and understanding of your SAP position will be synchronised across all stakeholder areas.

Overall the key point here is that your IT Systems and the role SAP plays in supporting your business have significantly advanced technically over the years, and your SAP agreement needs to be brought in line with these advancements.


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