Global business – Manufacturing and Distribution

Consumer Packaged Goods, £20bn revenue, 60,000 employees, SAP Contracts, Licence Optimisation, Cloud Services Transition, Licence Value and Support Fees, Negotiation.

Challenge

Customer was not clear how to optimise their exit from their current contract on expiry as they had other contracts before and after this with additional licence values which presented a confusing Licence Estate.

They had also not maintained accurate and up-to-date records of deployment associated with the contract and had not fully or correctly classified users. In addition the original project of global roll-out linked to the contract had significantly changed, was behind schedule and no longer aligned with all of the Bill of Materials in the contracts.

In parallel they were planning to embark on a programme of transitioning certain function and services to “Cloud Services” from on-premise and required advice regarding contract T’s & C’s, On-Premise Licence to Cloud Subscription services leading to a hybrid operating model. How to recover any or some of their on-premise to be discontinued licence value and manage the Support fee transition.

Solution

We carried out detailed analysis of all Named Users which resulted in a plan which we presented for systems administration to be executed by the client.

This was to bring this up to date. We then reviewed the Named User Classification rules and re-aligned this with both the contracts and the Roll-Out plan. In parallel we assessed the true use of Engines and correctly applied the contract metrics and rules for measurement.

We developed this into models which could then be used for planning, forecasting and budgeting against future business requirements and expectations.

Following this we were able to identify Users and Engine licence surplus and associated support fees and build a Business Case with strategy and tactics to support the client from a negotiating stand point. Though acting behind the scenes we directly supported the negotiating team (legal, IT, Procurement & Commercial) to obtain the optimum results.

Results

The whole process took us about 3 months elapsed time and enabled the client to gain £18m of additional licence entitlement than their current plan/expectation. Savings on SAP Support fees were approximately £2.3m.

More important to the client than actual discount was the inclusion of Terms and Conditions which provide protection against significant unforeseen increases in Engine Licence Fees and greater flexibility in the future mix of products and their Usage over time.

N.B. We have subsequently be re-engaged several time to assist with the first Cloud Services Agreement and negotiations and mapping current and future Licence requirements to a new Future road map for SAP (5-7 years)