Hosted by 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 © 2002 AMR Research, Inc.

Hosted by 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.

Hosted by 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.

Hosted by 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.

Hosted by 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.

Hosted by SAP R/3 - Traditional User Community SAP USER TYPES - Operational - Information - Requisition and Confirmation - ABAP SAP USER TYPES - Operational - Information - Requisition and Confirmation - ABAP - Financial /Accounting - Cash Management - Funds Management - Investment Management - Controlling - Project System - Materials Management - Plant Maintenance - Sales & Distribution - Production Planning SAP R/3 FUNCTION BLOCKS INDUSTRY SOLUTIONS NEW DIMENSION Confidential © 2002 AMR Research, Inc. 6

Hosted by 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.

Hosted by 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.

Hosted by mySAP.com - The New Enterprise Confidential SAP USER TYPES - Professional- Employee SAP USER TYPES - Professional- Employee mySAP.com - CRM - SCM - SRM - PLM - HR - Financials - BI - Portals SUPPLEMENTARY SOLUTIONS BUY SIDE SELL SIDE SELL SIDE INDUSTRY SOLUTIONS © 2002 AMR Research, Inc. EnginesBolt-on

Hosted by 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.

Hosted by 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.

Hosted by Negotiation Scorecard Confidential© 2002 AMR Research, Inc.

Hosted by 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.

Hosted by 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.