ISG assists a major retail and television company in effectively leveraging its sunk investment in SAP ERP central component (ECC) to achieve $76 million in S/4 HANA savings.
Opportunity
A major retail and television company engaged ISG to help it in creating and executing on an SAP negotiating strategy. It wanted ISG’s help to execute on its digital transformation roadmap in 6 weeks. To support this effort, ISG deployed a team of SAP licensing and technical and audit advisors to work with the company’s various stakeholders. Together, we worked to create a negotiating strategy based on the following factors:
- The company’s business and transformation objectives, and its license entitlement and compliance position based on its existing estate of SAP packages and engines;
- ISG’s view of license mix optimization opportunities;
- Conversion credits based on ISG’s mapping of ECC to S/4HANA equivalents;
- Digital access exposure; and
- ISG market benchmarks and ISG domain expertise in SAP S/4HANA contracting and pricing policies.
Imagining IT Differently
ISG strategically leveraged our reputation as a “deal advocate” to achieve the following deal attributes:
- Pricing: ISG advised on pricing based on the company’s invest and run costs, our deep market data, conversion credits, reduced maintenance rates, phase-in of maintenance and software-as-a-service (SaaS) subscription fees.
- Contract Flexibility: We secured value flexibility on the on-premise engines and step-in on the cloud products.
- Risk Mitigation: ISG helped it suspend compliance audits, conform digital access based on its business model, and expand territory restrictions and affiliate use.
- Partnership: We obtained an upfront SAP investment to ensure a successful transition from ECC to S/4HANA.
Future Made Possible
The company received a market-leading agreement to achieve each of its cost and risk mitigation goals. Under the agreement, it realized the following benefits:
- Savings of $76 million; to achieve these savings, ISG:
- Achieved a 94% discount on on-premise solutions and a 60% discount on cloud solutions,
- Secured free MaxAttention for 2 years,
- Reduced maintenance costs by transitioning from enterprise support to product support for large enterprises (PSLE),
- Negotiated step-in on cloud engines and packages based on its deployment schedule,
- Secured conversion credits based on the full value of the company’s ECC to S/4HANA equivalents, and
- Negotiated a single-use metric to address digital access license requirements;
- Maintenance and audit holiday of 2 years; and
- Flexibility to manage its SAP estate for a period of 3 years before crystallization of the environment.
