What's the Street Price of SAP?

Mengoxon asks: "Many software/hardware companies for enterprise solutions (BAAN, Oracle, PeopleSoft, ...) offer informative websites, but one thing that is always missing is the price. Whether they are afraid to let the competition know (they know anyway) or whether they don't want to shock potential purchaser 'Our suggested retail price is $800.000' or whether they first want to understand your company to do some price descrimination. I don't want to tell all my company details just to find that the price of something is way out of my league anyway and I don't want to be hassled by sales personnel while I am still in 'consideration stage'. Some companies want your general contact information BEFORE they pass out informational materials, like whitepapers! Is there any website out there where IT people can openly exchange and find out price information and evaluations of enterprise solutions before they get caught in the machinery of an enterprise solutions sales department? I know that the price of a solution is dependent on the size of the solution but if a sales person can work out the price from a few facts about the customer, then any sane IT person can probably compare an offer to another company and relate it to his own situation!"

SAP Pricing

[Anonymous Coward]

There appear to be two questions here: (1) what does SAP cost per seat, and (2) how to figure out what it costs to implement SAP. The second question is a bit like asking what it costs to build a manufacturing plant or a power plant. Really depends, doesn't it? SAP is not like buying a car or an almost finished product; it's more like building a house; the raw material is only part of the overall cost. And as you might expect, the largest cost would involve the people doing the implementation (e.g., "construction").

Try this link for more info:

http://searchsap.techtarget.com/

There are also several other SAP sources on the web that are not vendor-based (one good one was in .au at one point, but I have lost the link).

As the other posts indicate, there are a lot of factors that go into the pricing of SAP and mySAP.com licensing (item 1). One good source for info on this area (on any ERP) are the IT think-tanks. GartnerGroup had published info on the SAP pricing at one point (now out of date, but still helpful), and would be willing to serve as a consultant organization to help your evaluation process (for $$$ of course). I have been involved in several Bid processes where there was a consultant helping to manage the bid. Their added value is they may be able to help in the negotiation of the license, but you would have to look into this a bit further.

Yes, I know the above is *just asking* for flames, but for most companies, doing SAP or Oracle or PeopleSoft costs lots of $$$, takes time, and adds stress to corporate life (because you have to CHANGE, and very few places like lots of change). So paying up front for advice still seems like a good idea to me.

[[That's *Mr. Coward* to you!!]]

PS - SAP and the others are like the old saying about buying a Porsche/Benz/Jaguar/etc.; if you have to ask what it costs to own it, you may be in the wrong showroom.

re SAP Cost

[Anonymous Coward]

Sorry to post this anonymously, but I dont want to get my company in trouble. The license agreement forbids you from mentioning anywhere the price of SAP. We have undertaken to implement SAP, our initial budget called for a six months and 1.2 million dollars. Currently we have been working on it for 18 (19 now) months and have spent a bit over 4 million dollars. Each user license was $4,500 dollars but that was the least expensive part. Hardware. We had to purchase a bigger server that turned out to be too small after only six months, so purchased a bigger one: 4-way PIII processors, 2 GB RAM, 105 GB RAID 5. As of this time, that server is getting too small as well. Training. Training is VERY expensive. SAP requires you to take many, many "courses" at prices from $1,800 to $5,400 each. Each course gives you just a little information and instructors tell you that whatever information you require, and ask for during the course, is given in some other course. The courses are staggered, so you have to take for example, SAP20 before any other or BC310 before BC320. Nice little mint going there. Consultants. Youll have consultants coming out of your ears! Each consultant will set you anywhere from $150 to $250 dollars per hour, plus travel and out of pocket expenses. Each consultant is a "specialist", so if you are implementing MM (Materials Management, inventory control in SAP-speak)youll need one specializing in MM, then another in SD (Sales & Distribution) to configure the billing of materials, another in CO (Controlling) to account for the ins/outs of materials, ad nauseaum. Maintenance. You will be required to pay a 17% maintenance fee, the 17% being on the total amount paid for licenses. This fee gives you the right to contact customer support if you have problems and the right to get "hot packages" (service packs). Customer support is not very responsive and it usually ends pointing the finger to customer configuration "errors". You need to hire another consultant to demonstrate that it is a SAP software problem. Finally, dont fall for the Accelerated SAP program. It promises to get SAP implemented in as little as six weeks! Forget it, it means using SAP almost as it came out of the box and ADAPTING YOUR BUSINESS TO IT. Another interesting point is that the standard license agreement gives SAP property for any code you develop using their platform. You can get that clause deleted but if you are not carefull they will legally own any adaptions, extensions or new programs you create. At this time we are in the process of pulling the plug on this project and considering the 4 million dollars an educational grant on all employees involved. You have been warned.

Re:It's not the price of the software

[RocketJeff]

Exactly! I worked for a medium sized company when it decided to implement SAP R/4 and the cost of the SAP R/4 software was (relatively) minor compared to the orhter costs.

At $2000/week for the cheap classes, it doesn't take long for the training cost to soar past the software cost (and we had lots of people in training for over 8 weeks).

Add to that the fact that they sent the entire programming staff (mainly AS/400 RPG programmers...) to several ABAP programming courses each. This wasn't an 'upgrade our workers' tactic so much as it was a 'keep the obsolete programmers happy enough until we can jetison them when we don't need them anymore' tactic.

Another factor in the cost of SAP is that (IIRC) 1/3rd of the staff trained on SAP leaves before the rollout (to be highly paid SAP consultants). At least that's the way it was in 1999, it's probably changed a bit by now.

It's not the price of the software

[MrBlack]

A friend of mine has works in I.T. with a number of organizations that have deployed SAP systems, and his dad works with SAP also. From what he said it wasn't necessarily the cost of the software that was that big, it was the installation/configuration that was the real killer (and of course this would vary between organizations). He's worked in places that have hired armies of consultants, spent 18 months, and budgeted millions for something he thought should have taken a few people 3 months. He even said they hired "Change Counsellors" to help staff deal with the emotional impact that changes resulting from the SAP implementation would bring, and taught the staff to juggle to help them "think outside the box".

Varies based on Market

[PatJensen]

My understanding, as a consultant, is that a lot of these companies base their prices on the market that they are selling to, i.e. a Fortune 500 firm or an e-commerce company. Oracle's pricing should be widely available from a reseller or solutions vendor. They generally have pretty solid pricing and sales practices.

Companies like SAP and PeopleSoft want to build a relationship to give you the software as well as the services necessary to implement it. This may or may not be a good thing - as it can cost a lot, even for corporations to implement their services, but you can get service level agreements and quality assurances if you do choose to use their services and software.

Hope that helps to give you a better understanding. I would recommend talking to one of their Account Manager's for your area and asking them about their sales practices - tell them you are considering buying their products.

-Pat

The licence just leads to service

[Otto Normal]

There's a say here in Germany about SAP: first they charge you with 1 mio. DM for the software, then they suck 10 mio. out of your pocket in implementation, customization, consulting and support.

By the way, there is no such thing as price transparency in the licence area - it's all very much a negociation thing where a whole set of complex "soft" and "hard" parameters are beeing considered (company size, prestige, competition, ... )

SAP Bites =P

[Anonymous Coward]

The company I work for runs SAP. Its a mid size company, I think about 300-400 employees spread over four or five buildings, with field service and sales reps.

I wasn't really involvled with any of this, since I don't work for our IT department anymore, but the scuttlebutt was that it cost about $500,000 just for the licensing to upgrade from 31h to 40B.

Of course that's just the beginning. Our IT department (Composed of about 15 people) has six people completely dedicated to coding for SAP, and two more people who spend a lot of time on it. Plus during the upgrade period when everything was getting planned out we had three consultants there working on it as well.

Add to that mix that the new GUI is a resource hog (you can run it on a 486 if you don't mind waiting 30 seconds for stuff to happen after you push a button, and five minutes to start the application).

Management loves SAP, they market really well. However, those who have to impliment it curse it constantly. Did I mention that those SAP developers that work for us are always complaining because most of the code is commented in GERMAN?! They are also constantly loading hotfixes for SAP.

It took one of our developers about two months to make SAP work with some barcode printers we have for inventory control.

OTOH, I've seen online that some other companies really like SAP. I don't know, but I think they're embaressed to admit they spent millions of dollars on that POS.

Posted anonymously... last thing I need is to get fired because SAP sucks =P

It's not that simple

[duffbeer703]

Implementing large, complex ERP management products like SAP or Baan are not a matter of purchasing some software and loading a CD into your server.

Since ERP software will be the 'data bus' for your entire business, it needs to be customized somewhat for every implementation.

Also, SAP solutions are not standalone projects. In addition to multiple (and distinct) SAP modules, you need to have an installation of Oracle or some other RDBMS (probaly a distributed version) as well as a large investment in 'big iron' hardware configured for high availability.

Add to this employee training (end-user and IT), consulting time, conversion or integration of legacy resources, hardware & software maintainence and you have one hell of a hairball of a project that will be very difficult to plan and cost accurately. (Even after spending thousands on planning everything :) )

Time and Materials...

[gus goose]

I have worked for SAP "partners" in the UK, and I am fully aware of their strategies.

The bottom line is that SAP and most other large packages are very stable in the sense that there is not much new developpment. Their strength is in their perceived stability.

The drawback is that the model is not very flexible. SAP would never admit it, but their modules are based on "best practices", and very few businesses actually have bast practices.

Thus, to get SAP installed, it needs about 50% customisation of the code, and 50% customisation of the business. Neither of these are cheap.

Now, SAP really makes it's money on the installation, and not on the actual software. For an installation, they get to throw a number of consultants, and a number of ABAB programmers at the client, all substantially marked up. They talk in riddles alternating between MBA style management consulting, and at very basic ABAB concepts. Neither of these are in the real reach of the customer, and the customer is bent / masaged / coerced to fit the SAP mould.

Although I am biased, and am rather cynical, I believe that the above holds an element of truth.

The short answer to your question is that SAP will not tell you the proce of the product because:

1. The software is licensed on a scale related to the customer's size, support requirements and status.
2. SAP will have a licensing structure which is often significantly discounted, but not all discounts are equal. They do not want their customers to be able to easily price shop.
3. The bulk of the money comes in through implementation through customisation / consultancy. This is, if SAP is successful, performed on a time and materials basis, and thus the costs rapidly escalate.
4. Competition is quite fierce with people like Oracle, and price quoting is a bad thing if your business sales pitch is based on reputation and goodwill, not a "good bargain".
5. SAP will drain every penny they can get, and the price is really an Arm and a Leg (literally if you count the staff turnover generated by job redundancy and change stress, as well as scape-goatism).

Basically, be prepared to pay more than you bargained for, whatever you are quoted.