Transcript Document

SAP Case Study: Pricing and
Packaging Strategies
Improving Customer TCO by moving
from Components to Suites
Richard Yim
Director, Product Marketing
“Powered by SAP NetWeaver” Program
 SAP, SAP NetWeaver Product Marketing, Richard Yim 2
SAP NetWeaver – Platform for Changing Times
The Decision – Suite vs. Components
Pricing Methodology – Choices?
Pricing for Software Partners…….the ISV model
SAP NETWEAVER
Open Integration &
Application Platform
Platform for
Changing
Times
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THE PREREQUISITE FOR FUTURE GROWTH
FUTURE GROWTH DEPENDS ON YOUR ABILITY TO CHANGE
Change mgmt
and process
build time
(incl. IT)
Years
Months
Weeks
Product
lifecycles
Days
Hours
Process
execution
time
Minutes
1900s 1920s 1940s 1960s 1980s 1990s 2000s
Source: Gartner Inc.
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Business Requirements
Turning Revolution Into Evolution
Adaptive
processes
Enterprise Services Architecture
SAP NetWeaver
Web Services
Scalable
processes
3-Tier Client/Server
R/3 Basis
Client/server
Integrated
processes
X
Mainframe Arch.
ABAP
Mainframe
Technology Advances
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SAP NETWEAVER
Platform for Changing
Times
The Packaging Decision
….Suites or Components
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BUSINESS IS NOT A ONE WAY STREET
NEW I.T. CAPABILITIES REQUIRED FOR THIS EVOLUTION
CORE
CONTEXT
Focus: Differentiation
Focus: Productivity
INNOVATION
Mission
Critical
Activities
STANDARDIZATION
CONSOLIDATE
Enabling
INVENT
Activities
INVENTION
Courtesy to G. Moore’s “Living on the fault line”
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INSOURCE
OUT-TASK
SCALE
COMPOSE
RETIRE
COMMODITIZATION
ENABLING A NEW ROLE FOR I.T.
FROM INFORMATION TO PROCESS INNOVATION
Information
Technology
UI
UI
Process Innovation
Technology
UI
Composite Application
Functional
components
DB





SAP NetWeaver
DB
Function automation
Heavy duty programming
Database, messaging
Multiple closed app platforms
Inflexibility, high TCO
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




Process innovation
Model-driven development
Composites, services
One open composition platform
Flexibility, business value
PLATFORM FOR BUSINESS PROCESS INNOVATION
A BUSINESS PROCESS PLATFORM EMERGES THAT
COMBINES APPS FUNCTIONALITY AND TECHNOLOGY
Custom composites
COMPOSITE
APPS DRIVE
PROCESS
SAP and Partner xApps
SAP composites
ENTERPRISE
SERVICES
SAP NetWeaver
Enterprise
Services
Repository
SAP
Enterprise
Services
3rd party
Legacy
Business
partner
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Partner &
Custom
services
BUSINESS
PROCESS
PLATFORM
Where SAP is today with NetWeaver?
1000 NetWeaver reference Customers
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SAP NETWEAVER
IN 2004
5 Key
Learnings that
drive pricing
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Pricing and Distribution Strategies for NetWeaver?
1. Flexibility is key
for growth and survival
Usage based pricing to
promote adoption
2. Web services provide flexibility,
but are not enough
Integration engines
licensed only when
needed
3. A business process platform
emerges and provides
Enterprise Services
Departure from
component-based pricing
toward perceived-value
pricing
4. A huge eco-system
develops around it
Suites reduce complexity
of integrating required
components
5. Evolving business needs require
tighter component integration:
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JP Morgan coins
“Applistructure” model
….what does that mean
for customers?
Large customers tend to need the same things
SAP CUSTOMERS’ MOST WANTED SCENARIOS
Better analytics
& reporting
Custom App
Development
Web services
enablement
Build a knowledge network
Composite
Applications
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Portal
Cockpits
Manage
Master Data
A2A and B2B
integration hubs
Extending
R/3
SAP NETWEAVER 2004
Open Integration and
Application Platform
1 Integrated Platform
Synchronized releases
SAP NetWeaver™
PEOPLE INTEGRATION
Portal
1 Foundation
Web AS 6.40
Collaboration
INFORMATION INTEGRATION
Bus. Intelligence Knowledge Mgmt
Master Data Mgmt
PROCESS INTEGRATION
Integration
Broker
Business
Process Mgmt
APPLICATION PLATFORM
J2EE
ABAP
Hardware, OS and DB Abstraction
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Life Cycle Mgmt
Composite Application Framework
Multi channel access
1 Package
Coherent, rapid
installation process
1 Set of scenarios
Integrated components
Available to all customers
SAP NetWeaver Powers mySAP Business Suite
Adaptive Business
mySAP
SRM
SAP NetWeaver™
PEOPLE INTEGRATION
mySAP
SCM
Multi channel access
Portal
Collaboration
Strategic
Sourcing
INFORMATION INTEGRATION
Knowledge Mgmt
Business Intelligence
Master Data Mgmt
PROCESS INTEGRATION
Integration Broker
Business Process Mgmt
APPLICATION PLATFORM
J2EE
ABAP
DB and OS Abstraction
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Demand/
Source of
Supply
Supplier
Evaluation
SAP R/3
SRM
Backbone
SCM
Backbone
3rd party
Solution
POWERING ALL SAP SOLUTIONS
mySAP ERP, mySAP Business Suite, SAP xApps, …
mySAP ERP 2004
mySAP SRM 2004
SAP xApp Product Definition
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SAP NETWEAVER
Open Integration &
Application Platform
Pricing
Methodology
Choices
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Factors Affecting SAP NetWeaver Pricing
Objectives
SAP’s
Market
Profile
Costs
Legal
Constraints
Pricing
Plan
Potential
Competitor
s
Customer
Attitudes
Differentials
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Competitor
s
Price Setting for new Products
1. Competitor Prices
Low Price
And prices of alternatives
No profit at
this price
2. Costs or Business Model
High Price
No demand at this
price
3. Customer assessment of unique
Product features vs. platform
$
$
Components
engines
Tools
$
Business Processes
IT Scenarios
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$
Pricing for a Business Process Platform?
Objective
Demand
costs
Competition
Perceived-Value Pricing Method
SAP Install Base
Market Share
“Applistructure”
1.
More value than alternatives
2.
Identify Customer Value Drivers
(Differentiation, Innovation drivers)
<Price Sensitivity>
3.
Customer Decision-Making Process
SAP Customers
ISV Community
SI Community

SAP must deliver value promised

Customer must perceive value
As platform
for SAP Applications
Costs

No <not
Charge for mySAP Suites
discussed
rd party or external integration

$$ 3
here>

$$ Legacy SAP Systems
(R/3)
Alternative

$$ Runtime for ISVs Platforms or
components
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Method
Final
Price
SAP NETWEAVER PRICING IN 2004
THE 3 WAYS TO LICENSE SAP NETWEAVER
A)
For new and existing
mySAP customers
 As part of the mySAP
named user license
 Extend and integrate
mySAP solutions
B)
For R/3 customers,
who choose to not
upgrade to mySAP
 Through separate
NetWeaver users
 Extend and integrate
R/3 based solutions
C)
Runtime for standalone development
or 3rd party software
 Processor-based
option
 Covers technology
platform only
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SAP NETWEAVER PRICING IN 2004
Enterprise Portal
Business Intelligence
Mobile Infrastructure
Web Application Server
eXchange Infrastructure
Internal integration
Any
Non-SAP
Master Data Mgmt
3rd Party Adapters
SAP NetWeaver
Developer/Professional
NetWeaver design time
C) STANDALONE OR 3rd PARTY DEVELOPMENT
Firewall
External integration
SAP NetWeaver runtime use right included in CPU license
Requires extra SAP NetWeaver licenses (engine & user pricing)
 SAP, SAP NetWeaver Product Marketing, Richard Yim 23
So…..did the packaging and
pricing strategy work?
Move Customers to Sustainable Cost Structure
REDUCE TCO AND ENABLE INNOVATION
281% ROI
43% TCO Red.
586% ROI
on NetWeaver and TCO…
“The business case for SAP NetWeaver:
lower total cost of ownership”
“It is possible that as much as 25% of the
cost of new infrastructure technologies
purchased each year can be eliminated by
deploying SAP NetWeaver.”
308% ROI
25% TCO Red.
453% ROI
on NetWeaver and TCO…
“A SAP survey of 200 customers found
that SAP deployment reduced costs in
three areas: integration through the use
of NetWeaver components,
consolidation of the IT landscape and
the implementation of best practices
using product functionality.”
•
362% ROI
Source:
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Demand for SAP NetWeaver ‘04
Thousands of
Customers with
existing releases
of SAP NetWeaver
components
JP Morgan, September
24, 2004:
“Best positioned for rise
of Applistructure”
Hundreds of Ramp-Up
customers - demand
exceeds supply
 SAP, SAP NetWeaver Product Marketing, Richard Yim 26
Mass-Shipment
NOW
Morgan Stanley Survey :
“33% of SAP customers
are planning a NetWeaver
projects in next 12
months”
AMR Report, May 2004:
“SAP NetWeaver:
Not if, but when”
Every SAP
Solution will be
built on SAP
NetWeaver
Strong Partner Community
ADDING MORE VALUE TO SAP NETWEAVER
Powered
by SAP
NetWeaver
P Partner code
running on
N SAP NetWeaver
Certified
for SAP
NetWeaver
Partner solution
integrated with
SAP NetWeaver
P
N
SAP
Service &
Technology
Partners
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Further Information

Public Web:
www.sap.com
SAP Partners: www.sap.com/partners/

Related SAP Education Training Opportunities
http://www.sap.com/education/
http://www.sap.com/partnerportal/education/
 SAP, SAP NetWeaver Product Marketing, Richard Yim 28
Questions?
Q&A
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