Is SAP Leveraging on Acquisitions to Push the S/4HANA Adoption?

The nature of acquisitions is that it is unavoidably disruptive to the operations of businesses. While this may be a disadvantage, SAP actually sees this as an opportunity to encourage organizations to adopt S/4Hana. 

How is this so? During acquisitions, when one company using SAP acquires another that also uses SAP, then it would only be logical that they will use SAP across their combined entity. But there is a challenge here because there are restrictions on the business terms of SAP. 

All parties have to agree with this in writing so that they can use SAP software. If this organization violates the terms, then if they are audited, they may have to pay a significant noncompliance fee.

Another scenario here is when one company have licensed their software using a particular metric such as the number of employees. When it is merged with another company that uses a different metric, then the two licenses have to be merged. This new entity will need to have a licensing restructuring by negotiating with SAP. 

Ultimately, these scenarios will end up using a combination of the merged or acquired SAP assets. They are going to need another SAP arrangement. Such an arrangement is not going to be free. And using a combined software, SAP can leverage on this kind of situation to push for S/4HANA. 

There may also be cases wherein an SAP customer acquires a company that isn’t using SAP software. In this particular situation, it could be possible that the available number of licenses may not be enough for the number of SAP users. This scenario is another example of how a company or organization will be out of compliance with the licensing terms of SAP. 

So, to present a solution to this problem, SAP may encourage the organization to migrate to S/4HANA instead. It could be presented as a way to solve an audit as well as to eliminate the risks of facing business interruptions. 

Here’s another situation where SAP can push for the adoption of S/4HANA. Acquisitions usually take time. They are not finalized for months and even years after the public announcement. The reasons for this could include political meddling, shareholder fights, and regulatory delays. 

During these delays, SAP gets the opportunity to modify the terms of agreements so that once the acquisition is complete, it will be to their advantage. Even though SAP could already enjoy the protection as described in the previous examples, SAP may require that language may be included in another transaction that would create a specific prohibition in the usage of SAP software of the two merging legacy systems. Again, the solution here could be S/4HANA adoption. 

To ensure that you can consider all options during acquisition, it would be best if you can familiarize yourself with the contents of the terms and conditions. It will help you to understand what the risks are if you’re thinking of combining your SAP assets. You can get the services of a third-party advisor so that you could be assisted in reviewing the documents. You will also better understand what your options are with regard to SAP as well as the recommended strategies when it comes to moving to S/4HANA. 

If you are informed as a customer and you understand a great deal about how other clients were able to use their negotiated or existing commercial terms, you can actually use this knowledge to leverage the existing terms so that you can move towards a more transparent and predictable migration to S/4HANA.

Lastly, if your business’ technology platform is SAP-based, it would be in your advantage to engage proactively with SAP. Set expectations so you can build a level of transparency with them. You can develop and elevate executive relationships while, at the same time, establish credibility. This move will allow you and your company to drive both the conversation and the agenda. 

When you position your organization as one that is willing to commit to SAP investments, it will result in more constructive discussions regarding the acquisitions in the short term. And in the long term, you can further discuss about a productive migration to S/4HANA. 

Acquisitions create tensions and uncertainties. However, if you can approach this the right way and be as informed as you can about SAP’s contractual terms, then you’ll be able to enjoy an increase in transparency and lessen the level of uncertainty.

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