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Wednesday, 6 December 2017

Lessons from SAP - why B2B companies need to simplify pricing discussions

SAP has been in the news for wrong reasons in the past year. The German ERP software giant engaged in a litigation with Diageo UK for violating SAP's indirect licensing rules by integrating SAP with software from Salesforce. The judge found Diageo guilty of violation, through the company had already paid SAP more than 54 Million GBP in licensing fees.

To put it simply, SAP charges additional 'indirect' licensing fees on any software that connects even indirectly to data stored on SAP systems.  Many customers were not aware of this, and now they are wary of engaging in any dialogue with the company, for fear of being hit with huge bills

SAP is now belatedly trying to simplify and modernise its pricing policy and its leaders are touting customer centricity as the core of the company, but it does  not seem to be reaching out. In a poll conducted by the ITAM Review, nearly 76% of SAP customers have concerns or fear the consequences of engaging with SAP on licensing issues

SAP customers want clarity, not a conversation
(Source : ITAM)

Licensing is a horrendously complex subject. Ask Microsoft. Ask Adobe. Ask Oracle. They would all have stories to tell about the difficulty of communicating licensing to customers.

So are  many of the technical, legal or price-related conversations that B2B companies need to have with their buyers. Especially in the new age of cloud, big data integration and multi-device access.

It is crucially important to strip away the legal jargon and communicate with complete clarity. 

The benchmark for describing your terms and conditions should be 'Is it easy enough for a layperson to understand?' If not, you need to work on simplifying it.

In fact, the clauses that are most likely to be ignored or misunderstood, should be highlighted and given extra importance.

Banks really do need to bring in more honesty in communication. With respect to account charges and credit card charges. The age of hiding behind small print and legalese is over. 

Conversations on money should never, ever have ambiguity. It's true in case of the smallest deals, and the biggest corporations. Therefore, it is surprising that SAP has allowed ambiguity to exist.

The repercussions are painfully clear in this case. Reduced customer confidence. Lack of trust towards the company that they pay millions of dollars to already. And ultimately, an erosion of the brand equity that the organisation has  built over years. 

One hopes that they can come out of it. But meanwhile, others can look at the situation, and learn their lessons.