SAP Business ByDesign Contract Rules & New License Model Changes

SMB Innovation Summit 2019SAP Business ByDesign Contract Rules &New License Model ChangesDirk Neudert, SAPMarch, 2019Internal SAP Employees and Partners Only

Licensing and Pricing for SAP BusinessByDesign needs to be re-designed to astate-of-the art model. Today, we willinform you about the key details. 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners2

AgendaLicense Model Simplification Reduce existing model from 8 user-types with 5 prices down to 3 user-types with 3 pricesConsumption based Pricing Introduce Digital Access and Storage based Pricing components 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners3

License Model Simplification

New SAP Business ByDesign License Model requiredFollowing enhancement ideas are frequently communicated by our Customers Team User Views of different Team User Types should be consolidated to a single user type with no further impact onthe required licence consumption as they all cost the same. Self-Service User Views of different Self-Service User Types should be assigned to a single user with no further impacton the required licence consumption. Consolidated User Types avoid potential misuse of single user types and simplifies the User Administration Functional overlaps in an organization easily ends in the need of a more expensive user type, even if they belong to thesame business topic area. F.e. in the actual model a lot topics belong to the Team User, but one missing functionbelongs to the Enterprise User. This functional relation to user-types should be streamlined as such detailed differencesare often not clear and don‘t make sense for the customers. Approval tasks often require an expensive user-type (Standard Enterprise User) compared to the overall tasksresponsibility of the employee Overall, customers are looking for a more fair share of license costs 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners5

New slim ByDesign License ModelBenefitsYou‘ve asked - Our reaction on your customer feedback Simplified and slim model with clear and understandable split of available functions per User Type Easier to understand for our Customers Simplified User Management Authorization Tasks will get cheaper compared to the actual model Better cost fit compared to the concrete demands per user and our customers overall 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners6

New slim ByDesign License ModelActual Model3 User-Types, 8 Sub-Types, 5 PricesSCM Enterprise UserNew Model3 User-Types, 3 PricesAdvanced UserProvides complete set of ByDfunctionality including additionalSCM functionality to managephysical inventory, supply chainplanning and manufacturing.Standard Enterprise UserCore UserTeam UserSCMCRMIncludes core functionality tosupport office workers,planners, accountants orsalespeople like customerrelationship management,purchasing supply chainmanagement, and projectmanagement to helpmanage team activity.PMSelf-ServiceUserSTDSCMPM 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for PartnersSelf-ServiceUserAllow users to perform coreself-service office tasks, suchas time and expense reporting,purchasing, and travelmanagement. Additional rolespecific tasks for SCM andproject management areincluded as well.7

License Model Comparison High-Level serSCM SelfServiceUserPM anresources--Projectmanagement--Product ionshipmanagement--Financials--Supply chainmanagement-Built-in analytics 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners-----------------------------Fully Included--Fully Included Fully Included8

New slim ByDesign License ModelOutlook Go-live is planned for Q4 2019 latest for new customers Existing customers can switch at the time of re-newal Existing customers cannot mix current and new user-types Potential higher prices in single cases for existing customers can be compensated via customerindividual discounting flexibility 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners9

Consumption based Pricing

Pricing Model for Cloud ERP SoftwareSituationStandard Commitment Consumption based PricingCloud ERP Software Providers use a mix ofStandard Commitment and Consumption basedPricing components within their Pricing Model Customers pay based on a subscription model for Licenses andfurther components / business related modules to cover the usageindependent costs of ownership As part of the subscription fee there is usually a defined volumeincluded for Consumption based Pricing components Going above the included volume, will be charged based onconsumption in packages or concrete metered volume Such mix of pricing components allows a stable pricing for allcustomers for subscription based pricing components 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners Included upfront commitment Advance billing for commitment Overused volume will be paid inarrears100%80%60%40%20%0%M1 M3 M5 M7 M9 M11ConsumedCommittedPreferred model for SAP forCloud ERP because of fix costsindependent from usagebehavior by customers11

Common used Consumption-based Pricing componentsIndirect UseMemoryConsumptionSAP S/4HANASAP S/4HANA The main Cost components directly influenced by the usage behavior of customers are Indirect Use (3rd partyintegrations) and Memory Consumption. They directly impact the TCO of the Cloud ERP Software Providers and finallycan lower their margin. Most Providers are sharing such costs with their customers. SAP Business ByDesign will introduce the samecomponents for new customers in 2020. 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners12

Digital AccessSAP Add-Onsintegrations comes with includedvolume to cover the direct useconsumption Storage based pricing focus is onattachments and test tenants(limited volume included inconsumed licenses) 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for PartnersCustom AppsIntegrationFile/BLOBStorageAdd‘tl Tenants Digital Access for 3rd party3rd Party AppsStorageIn memory DBSelf Service-UseUser Accessfor ByD in sync with S/4 HANACloudCore Use3rd Party UseAdvanced Use Future license and pricing model others Real SpendThree different User-Typesand additional Consumptionbased Pricing components forIndirect Use and MemoryConsumptionReal EstateSAP Business ByDesign harmonized with S/4 HANA Cloud Pricing ModelNew for SAP Business ByDesign13

Consumption based Pricing for SAP Business ByDesignHow it works Customer buys user-licensesor tenant-licenses as part ofhis contract Each license comes alongwith a definition of “includedusage/volume” Actual usage of the systemwill be measured (andvisualized in a dashboard Control for customer) There is no restriction withregards to the usage(at least from this aspect) On a yearly basis the actualusage will be compared with“included usage/volume” andcustomer need to settle incase of over-consumption Settlement based onadditional memory packagesor document licensesMetering basis: Number of Documents/year, Effective Storage 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners14

Consumption based Pricing for SAP Business ByDesignBenefitsFair share of costs Allow a stable pricing for all customers via subscription based pricing components by protecting the profitability forSAP as basis for stability Only significant over-usage will be charged - included volume for metered consumption based pricing componentsfits to the usage behaviour of 90% of our existing customer base Better cost fit overall compared to concrete demand per customer 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners15

The change of the License andPricing Model will better fit to thereal requirements of ourcustomers as well as creatingstable and projectable pricingconditions in the future. 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Confidential: Released for Partners16

Thank you.Contact information:Dirk NeudertHead of Pricing SAP Business ByDesignDietmar-Hopp-Allee 16, 69190 Walldorf 49 6227 7-65133Gamification Challenge CodeNIC1d8dBy entering this SAP Breakout Sessioncode you will be granted 10 points55

SCM Enterprise User Team User Standard Enterprise User SCM CRM PM STD PM SCM Self-Service User Provides complete set of ByD functionality including additional SCM functionality to manage physical inventory, supply chain planning and manufacturing. Allow users to perform core self-service office tasks, such as time and expense reporting,