Global CIO: SAP Eliminates All-Up-Front Payment Requirement

In a striking move, SAP is extending to 580 very large customers a plan allowing them to spread payment across multiple years instead of making one big capital-expense payment up front.
"Through the Global Enterprise Agreement model we have gained the experience on how customers want to buy and consume software based on building a long-term strategic road map over several years. We are now taking this concept, with some adjustments to take into account differentiated market needs, to our next 580 largest customers. We expect this to open up tremendous opportunities for growth going forward."

In response to a related question about whether any changes in annual maintenance and support fees would be forthcoming, SAP said, "We have not discussed such changes as part of today’s earnings announcement."

I think this is a great move by SAP—it shows a recognition of the realities its customers are facing, it shows a willingness to innovate with business models that worked well for both parties in the past but are less effective in today's environment, and it also shows that the company long known for its technical rigor might well be willing to show more flexibility in its marketing and sales strategies.

That's more important today than ever as customers are demanding that strategic IT vendors recalibrate with them the risk-reward ratios that have shifted dramatically in the global economic slowdown of the past 18 months. And while we here at Global CIO have certainly had our differences with some of SAP's approaches to its customers, on this pricing overhaul we have one overriding comment: well done, SAP.

And now we'll see if Oracle's got any similar ideas.

Recommended Reading:

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Global CIO: In Oracle Vs. SAP, IBM Could Tip Balance

Global CIO: SAP 2.0 Promises Business Value Over Products: Can It Deliver?

Global CIO: An Open Letter To SAP CEO Leo Apotheker

Global CIO: Will Oracle Or SAP Blink First On 22% Maintenance Fees?

Global CIO: SAP Preps For Cloud Future Via New Intel Alliance

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.

For more Global CIO perspectives, check out Global CIO,
or write to Bob at [email protected].

Editors' Choice
Jai Vijayan, Contributing Writer, Dark Reading
Kelly Jackson Higgins 2, Editor-in-Chief, Dark Reading