© 2002 AMR Research, Inc. amrresearch

1. How toNegotiate Your Enterprise Software AgreementWhy can’t we all just get along….Nancy GendronVice President, AMR ResearchContract Negotiation & Benchmarking Service Confidential © 2002 AMR Research, Inc. www.amrresearch.com

2. Agenda • What’s New in the Negotiation World? • Current Customer and Vendor Focus • SAP Negotiation Challenges • What About Everyone Else? • Customer Responsibilities • Closing Thoughts Confidential © 2002 AMR Research, Inc. www.amrresearch.com 2

3. What’s New in the Negotiation World? • Revenue down / Valuations down • Fewer opportunities • Higher project scrutiny and approval process • Unforeseen events and economic uncertainty causing project delays and cancellations • Significantly reduced customer risk tolerance • Yet, there has never been a better buyer’s market Confidential © 2002 AMR Research, Inc. www.amrresearch.com 3

4. Software Vendor Focus • Revenue recognition • Expand footprint in the base • Provide creativity only for significant commitment • Respond aggressively to competitive situations • Execution of Software License Agreement • Revenue recognition Confidential © 2002 AMR Research, Inc. www.amrresearch.com 4

5. Customer Focus • Reduce cost and level of up-front commitment • Increase ROI • Leverage the enterprise and current market conditions • Play vendors off each other • Job security Confidential © 2002 AMR Research, Inc. www.amrresearch.com 5

6. SAP R/3 - Traditional User Community SAP USER TYPES - Operational - Information - Requisition and Confirmation - ABAP SAP R/3 FUNCTION BLOCKS - Financial /Accounting - Cash Management - Funds Management - Investment Management - Controlling - Project System - Materials Management - Plant Maintenance - Sales & Distribution - Production Planning INDUSTRY SOLUTIONS NEW DIMENSION 6 Confidential © 2002 AMR Research, Inc. www.amrresearch.com

7. SAP R/3 Pricing • Defined value by looking within the enterprise • Price based on users and various levels of access • Extended price for New Dimension products as an add-on component Confidential © 2002 AMR Research, Inc. www.amrresearch.com 7

8. R/3 to mySAP.com Financial Issues • New license metrics • Re-price the Enterprise • R/3 Migration Credit • Revise Terms and Conditions Confidential © 2002 AMR Research, Inc. www.amrresearch.com 8

9. SAP USER TYPES - Professional - Employee SELL SIDE mySAP.com BUY SIDE - CRM - SCM - SRM - PLM - HR - Financials - BI - Portals SUPPLEMENTARY SOLUTIONS INDUSTRY SOLUTIONS mySAP.com - The New Enterprise Engines Bolt-on Confidential © 2002 AMR Research, Inc. www.amrresearch.com 9

10. mySAP.com Pricing • Bundled product approach intended to “win” the enterprise • Re-defined pricing approach to account for collaboration with business partners & customers • Established engine pricing as a method to capture value and secure future revenue stream Confidential © 2002 AMR Research, Inc. www.amrresearch.com 10

11. What about everyone else? • Oracle - Wrote a Price Book • i2 - “Let’s make a deal” • Siebel - “Our way or the highway” Confidential © 2002 AMR Research, Inc. www.amrresearch.com 11

12. Negotiation Scorecard Confidential © 2002 AMR Research, Inc. www.amrresearch.com 12

13. Customer Responsibilities • Accept that it’s not all about price • Require your team to educate themselves on the changing business practices of all your key partners • Define and follow your own rules of engagement • Remember the key to project success is in your implementation deal Confidential © 2002 AMR Research, Inc. www.amrresearch.com 13

14. Closing Thoughts • Customers must exercise vendors to think about pricing in the context of utilization • Don’t believe everything you hear • This will never be this easy again • Every company needs to increase its System Implementation negotiation sophistication • Speed kills Confidential © 2002 AMR Research, Inc. www.amrresearch.com 14