Last Updated on January 9, 2021 by Shaun Snapp
- There is a shortage of TCO calculation in SAP decision making.
- This article provides supporting information for the Brightwork Research & Analysis TCO calculators.
True, but Hidden Facts About SAP TCO
SAP has the highest TCO of all vendors. However, this fact is hidden from customers by not only SAP but also by their enormous partner network and IT analysts like Gartner and Forrester.
Our SAP TCO calculators allow the true TCO of SAP to be illustrated and come to life.
What The Brightwork Research & Analysis Calculators Cover: The Scope of Our SAP TCO Calculators
We can estimate the software BOM that SAP is presenting to a buyer or just a single SAP application. To do this it has required collecting data points of implementations of commonly sold applications such as ECC/S/4HANA, BW, and APO.
However, SAP has an enormous number of applications, more than most people, even those that work in SAP have any inkling. We explain this in the article How Many SAP Software Products Does SAP Have?
These applications have far fewer implementations than the most commonly sold applications. Yet, SAP has a specific cost that still applies (such as the SAP support cost, implementation with a large SAP consulting firm, etc..).
Our TCO Method and Our Independence and Focus on Accuracy
Our TCO calculators are about getting the most accurate estimate possible. We never adjust anything to increase or decrease the TCO estimate. This is because we do not factor anything into our analysis other than what the data shows. No vendor or buyer can pressure us to change any of our TCO calculators. And we have a history of accuracy predicting SAP, unparalleled in fact, and more accurate than SAP.
We provide evidence for this claim, in the article A Study on SAP Accuracy.
How to Access Our TCO Calculating Capability
Our TCO calculators are of interest and can be purchased by either software buyers or by software vendors. These are the most accurate TCO calculators on SAP anywhere.
This topic leads to our research into TCO calculation and how we can be so confident of the assertion we just made.
Our Research and Experience with TCO Calculation
We are the only entity to focus on detailed TCO calculations for enterprise software.
We were led to providing our calculators through our extensive research into TCO calculation which we began in 2013. We were surprised by what we found, which includes the following:
- Every single TCO calculation we reviewed was not a TCO but a partial cost of ownership, what we call a “PCO.”
- We found that buyers in nearly all cases have very little understanding or estimation of the TCO of the software they purchase. Vendors will repeatedly make the claim that new software reduces TCO, without providing any evidence, or relying upon any independent information source that this is true.
- The lack of real TCO calculation leads the most expensive vendors, vendors like SAP, to sell into buyers who can’t afford to maintain these systems properly.
- Our repeated reviews of various TCO calculators have illustrated to us that nothing has changed since 2013 when we first did our initial research on the subject.
TCOs or PCOs?
These “PCOs” that are misnamed as TCOs were in nearly all cases developed by either a vendor or consulting firm. These PCOs were designed to get software buyers to vastly underestimate the TCO of their purchase.
A perfect example of one such PCO was produced by Forrester and paid by SAP to do so. This ludicrous work by Forrester TCO something we critiqued in the article How to Understand Forrester’s Fake TCO Study.
Our Background in SAP
It is difficult to estimate SAP’s TCO without exposure to the application and to implementations. We have many years of SAP implementation experience. We received information on SAP projects from all over the globe due to our website and following in the SAP community. Furthermore, we have the most published material on SAP and a far more in-depth understanding of SAP than any IT analyst firm. When we supported various SAP consulting firms in pre-sales activities, we were constantly pressured by the sales staff to create unrealistic project estimates. It is impossible to continue supporting sales initiatives without rigging the project estimate to meet the demands of sales, which are to delude the buyer.
All of our many years of estimation calculation are rolled into our TCO calculators.
Features of Our TCO Calculators
There are many features of our TCO calculators that make them both very easy to use and easy to distribute. These features include the following:
- Accessibility: The SAP TCO calculators that we customize are available online, and are password protected. Our TCO calculators are accessible to the approved users through a web link at the Brightwork Research & Analysis website.
- Updating the Calculators: Keeping the calculators on the Brightwork R&A website allow them to be easily updated by us. And also to be copied and altered to create new versions. And this leads to the next benefit.
- Multiple Versions: The SAP TCO calculator can have different versions customized per different buyer environments. The reason is that no TCO calculation can be considered applicable until it is customized for a specific environment.
- Easy to Use: The SAP TCO calculators are easy to use, and they are adjustable. This means they can be used interactively by approved users.
Now, let us address the second bullet point, which is the customization aspect of our TCO calculators.
The Importance Verifying the Assumptions of the TCO Calculation
Part of the TCO package that is purchased provides for different variants of each TCO that fit with specific software buyers. For example, some software buyers have assumptions of how many custom applications replaced by the new SAP application. We perform the TCO estimate as well as estimate the likelihood that the SAP application will replace the custom client application.
- All of this is part of how we verify the assumptions of the application acquisition and its implementation and use.
- Verification of assumptions is a critical part that is normally missing from TCO estimations. Instead, TCO calculations tend to accept all of the assumptions presented by SAP sales as true. This naturally radically changes the TCO, reducing its accuracy.
- A major problem with the TCO estimate performed by Forrester is that they never verify or contradict any of the assumptions provided to them by the vendor paying them to create the TCO report.
Detailed Explanations of the TCO Calculators
Now we will provide more details and explanations that have their own supporting articles.
Detailed Explanation Page #1: The Credibility of Brightwork R&A for SAP
The credibility of the providing entity is critical to accepting the results of the TCO calculators. Our article How Credible is Brightwork Research & Analysis answers the question of the credibility of Brightwork R&A for SAP customers.
Detailed Explanation Page #2: The Value of Brightwork TCO Calculators
Vendors that compete against SAP can put our TCO calculators to good use.
Vendors should ask why should they compete against SAP with the presumption that SAP’s TCO is far lower than it really is?
The article Why Are Brightwork TCO Calculators Valuable to Vendors explains the value of the Brightwork TCO calculators to vendors.
For Software Buyers
For software buyers, TCO calculators enable better decision making.
Countering Rigged SAP Information
When a software buyer relies upon information from SAP, or Deloitte, etc.. they are getting advice from entities that seek to minimize the TCO in the software buyer’s minds. The large IT analysts work the same way to minimize TCO as we cover in the article Why Gartner and Forrester do not Want TCO Calculator.
All of these entities are aligned with SAP and aligned against vendors that compete with SAP.
Feature #3: Sample TCO Calculator Page
The sample TCO calculator pages have been updated and now include the supporting TCO method and related articles in a table embedded in each article. See one example in our article The TCO Calculator for SAP ERP ECC.
This is a sample and is something we customize for the specific company. All TCO calculators are served from the Brightwork Research & Analysis website.
Feature #4: Our Home Page
More about the overall research basis for all of the published material at the Brightwork Research & Analysis home page here.