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SAP Financing Education for Sales TeamsSAP FinancingEducation for Sales Teams

Global SAP Financing

Welcome to the eBook ‘SAP Financing – Education for Sales Teams’.

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SAP Financing: Unit Objectives

At the end of this session, you will be able to:Explain the importance of SAP Financing for our customers and for SAPDescribe the elements of the SAP Financing offerExplain the SAP Financing value proposition statements for customers, sales teams and channel partnersUse SAP Financing to counter common objections raised by customersExplain how SAP Financing integrates into our sales process

At the end of this session, you will be able to:

Explain the importance of SAP Financing for our customers and for SAP

Describe the elements of the SAP Financing offer

Explain the SAP Financing value proposition statements for customers, sales teams and channel partners

Use SAP Financing to counter common objections raised by customers

Explain how SAP Financing integrates into our sales process

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SAP Financing: Unit Overview Diagram

3. Sales Tactics

4. Sales Process with SAP Financing

Unit Title

1. Introducing SAP Financing

2. Value Propositions for Different Target Groups

Let’s start with ‘Introducing SAP Financing’.

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Why SAP Financing?

“We all appreciate the strategic importance of SAP Financing as customer liquidity is key to close deals. Ideally, we would like to see SAP Financing in every SME opportunity, direct and indirect, as an option for customers.”

- Eric Duffaut

“SAP Financing is a key tool for accelerating sales and overcoming customer objections related to the ROI of investing in SAP's products. Every sales person should understand the SAP Financing offering as a key element in their tool box, and whenever possible, use the offering early in the sales cycle to position their deals for success.”

- Bill McDermott

The new economic reality calls for a renewed focus on delivering more value to our customers, and demands that we provide our customers with more reasons to make a decision for SAP today rather that delaying it.

Quoting Bill McDermott, “SAP Financing is a key tool for accelerating sales and overcoming customer objections related to the ROI of investing in SAP's products. Every sales person should understand the SAP Financing offering as a key element in their tool box, and whenever possible, use the offering early in the sales cycle to position their deals for success.”

Also, Eric Duffaut has highlighted the strategic importance of SAP Financing, and that “we would like to see SAP Financing in every SME deal”.

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SAP Financing: Program Offering

Total Cost of Ownership (TCO) Model

SAP Financing provides customers with unique, competitive options

SAP SoftwareThird-party software on SAP price listServices Customer internal project-related costsHardwareMaintenance (up to first year)

Repayment term = 12-84 months*

Deferral of initial repayment

Flexible payment structure

Up to 12 months following project start *

Linear/ Variable Structured to customer requirements

* May vary by market unit; consult your local SAP Financing Business Owner

The program offering from SAP Financing provides an option for our customer, which is unique in the industry, and superior to that of our competitors. Our Total Cost of Ownership model provides our customers with the choice of including all SAP project costs. We offer what our competitors do not - the ability to include the customer’s internal project-related costs, and the first year of maintenance.

An interesting option, which illustrates the flexibility of the program, is that a customer can choose to defer the start of their repayment until their SAP solution becomes operational, up to 12 months following the start of their project.

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“I do not have budget for an SAP project this year.”

“Why must we pay so much money at the beginning of the project, when we will not be fully using the software for several months?”

“We would like to first purchase a small number of user licenses for the project implementation and then add the remaining users when the system becomes operational.”

“Does SAP offer a monthly payment plan, or a subscription?”

But, Customers do say:

Typical response from our Sales teams:

“Customers never ask for financing”

SAP Financing: Do Customers Need It?

We recognize that our customers rarely make an explicit request to SAP for “financing”. However, there are many statements from customers that provide you, as an SAP sales person, with an indication that an SAP Financing offer is exactly what the customer requires to make a purchase decision for an SAP project.

If your customer comments that they have insufficient budget for further purchases this year, or that they prefer to make incremental purchases over the next few years in alignment with their project implementation schedule, they are usually calling out for the benefits that can be provided by SAP Financing.

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SAP Financing: Unit Overview Diagram

3. Sales Tactics

4. Sales Process with SAP Financing

Unit Title

1. Introducing SAP Financing

2. Value Propositions for Different Target Groups

Now let’s take a look at ‘Value Propositions for Different Target Groups’.

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Value Proposition: SAP Customer

Business Pain-Points Return-On-Investment (ROI)

Total Cost of Ownership (TCO)

Budget optimization for IT investments

Cost transparency

SAP Financing Offering

Accelerated Return on Investment (ROI) Total Cost of Ownership (TCO)Financial flexibilityPreserve working capital Alternative line of credit Effective budget planning

Customer

Most of our customers are under severe pressure when it comes to justifying the cost of an SAP project. This is exactly the type of pain-point that SAP Financing is designed to address.

By using SAP Financing, implementation projects are not weighed down by high up-front expenditure, which typically defers the break-even point of the project. Spreading the cost over the project lifetime means that only a proportion of the expense has been incurred before project returns are made, thus bringing forward the return on investment.

What is unique is that it includes all aspects of the SAP project in a single financing agreement with software licenses, hardware, first year maintenance, and services. In essence, it is an all-inclusive, total cost of ownership package.

Financial flexibility can mean simply spreading the cost evenly over an agreed number of months. This flexibility can also allow for structured payments which may include an initial deferral of payments up to 12 months or a variable profile where payments start low and increase as the benefits from the implementation are realized.

Use of the credit lines made available to customers through SAP Financing means that customers can preserve their own precious working capital for more immediate operational needs or even strategic investments.

The flexibility of the offering allows the customer to align payments with their available budgets. Once a payment plan is in place, customers have complete transparency on their future SAP expenditure.

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Value Proposition: SAP

Business Pain-Points Improve profitability

Improve contract closing

Improve cash flow

SAP Financing Offering Response to the real world (constraints on

capital)

Improved profit through “Days Sales Outstanding”(DSO) Reduction

Improved discount management

SAP

There are significant benefits for SAP in using SAP Financing:

SAP recognizes the current challenging economic conditions and is offering its customers alternative sources of capital and flexible payment plans.

This means deals that might otherwise be lost, reduced, or delayed can still be closed.

Customers have an alternate source of credit and improved liquidity, and therefore are able to invest in an SAP project.

SAP Financing improves profitability through a reduction in Days Sales Outstanding, a measure of cash collection by SAP. Every day of payment deferral is a direct cost to the bottom line for SAP. SAP Financing gives immediate payment to SAP, which has a direct impact on Days Sales Outstanding and thus profitability.

By shifting the focus from “sticker price” to affordability within budget, the customer is less motivated to press for large discounts, which leads to a greater margin in the deal - and more commission for you!

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Value Proposition: SAP Sales Teams

Business Pain-Points Customer objects to price

Customer lacks budget

Customer delays decision

Commission payment delayed

SAP Financing Offering

Response to “No Budget”

Focus on solution but not on price

Strengthen business case (ROI)

Enables order value growth; prevents ordervalue shrinkage

“Financial Footprint” - account control andpenetration

Accelerate commission payout

SAP Sales Team

While our customers will see SAP Financing as a service, for our sales teams it is a sales enabling tool.

SAP Financing is an effective counter to the “no budget” objection. The financing can be structured to map on to the constraints of current budgets and the availability of future budgets. You can accelerate the acquisition of licenses by structuring a financing offering that anticipates future needs.

Use Financing to focus on the solution rather than the emotive issue of price.

SAP Financing will strengthen your business case by demonstrating an improved Return on Investment.

Order value can be increased. In some countries, it is possible to access a customer’s operational expense budget, thus giving the customer more financial flexibility to consider a larger investment, if this is in line with more effective solution deployment.

Once your customer is on a payment plan, you will have an insight into his committed SAP budget. You have the ability to propose additional investment by extending the payment plan, which also creates a barrier to entry for competitors who cannot access that budget spend. This is known as owning the customer’s “financial footprint”.

Do you want to get your commission faster? Under SAP Financing, payment for the deal is made immediately, meaning commission is not retained until the customer has paid.

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Value Proposition: SAP Partners

Business Pain-Points

Same sales issues as for SAP Direct teams

Availability of comprehensive financing program

SAP Financing Offering

Program is available to all SAP Partners

Program is more complete than that offered bycompetition

Hardware independent

Selection of project cost elements to be included in financing is flexible, based on customer requirements

SAP Partners

Whether the customer-facing sales team is from SAP or from an SAP Partner, the challenges to securing the sale remain the same.

All the benefits outlined for SAP Direct Sales teams are also available for partners.

SAP offers our partners a “plug and play” financing solution capability. There is minimal set-up effort or cost for our partners. This gives our partners a more comprehensive offering than any other source of Financing available.

The Finance offering is independent of the hardware supplied. This is a single financing solution for the entire SAP Partner ecosystem.

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SAP Financing: Unit Overview Diagram

3. Sales Tactics

4. Sales Process with SAP Financing

Unit Title

1. Introducing SAP Financing

2. Value Propositions for Different Target Groups

Now let’s move on to the ‘Sales Tactics’.

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SAP Financing: Objection Handling

“We require a bigger discount”10

“We do not use external financing”9

“Competition offers more flexible payment options”8

“Capital outlay for this project is too large”7

“Project implementation must be phased over the next 3 years”6

“ROI for this project does not meet corporate guidelines”5

“Other investment priorities at this time”4

“Not now” (we will wait until economy improves in 12-18 months) 3

“SAP project is too expensive”2

“No budget” (or insufficient budget)1

Objections and Demands by Customers

You will recognize many of these customer comments. We will focus on a few of them, using SAP Financing as a solution to the objection.

“No budget/limited budget.” You should question when the customer will have budget. Are their constraints just for this financial year? What access does the customer have to future budgets? Spreading payments, structuring payment profiles, and deferring payments are all possible under this scheme.

“Your competitor is significantly less expensive.” You need to change the basis of comparison from price to Return on Investment. The flexibility that financing offers can accelerate ROI significantly. If the customer wants finance, you are unlikely to be under the same discount pressure as on the cash sale price.

“We have other investment priorities.” You can provide the customer with alternative lines of credit which do not impact on their own capital or existing credit lines. Access to capital should not be a barrier, providing that the customer is credit-worthy.

“ROI for this project does not meet corporate guidelines.” The flexibility around structured payments and payment deferrals will allow your local Financing Partner to structure an offer that will accelerate and improve ROI by matching payments more closely to expected returns.

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“Project implementation must be phased.” Use financing to create an appropriate payment plan that matches the customer requirements for expenditure but commits the customer to future project phases. You do not want to re-sell the deal over and over again.

As you can see, SAP Financing can be a solution to many of the common objections expressed by customers.

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SAP Financing: Successes

GROWTH

PROFIT

WIN

Universidad Mayor (Chile): SAP Financing cited as decisive competitive element against Oracle Financing

Norwegian Airshuttle (Norway): SAP Financing preserved capital for aircraft investments

Alpha Corporation (Japan): Discount pressure minimized

OSC (Germany - Channel Partner): Improved margins with SAP Financing campaign for Business One (“100:0”)

Hospital Universitario San Vicente de Paul (Colombia): Order value (software) increased x5

Harrod’s (UK): Order value increased, 3 times larger than originally expected

Aimedia Corporation (Japan): Order value increased, +25%

As a sales enabling tool, SAP Financing can help to grow the value of an order, increase the profit margin of an order and add a compelling reason for a customer to make a decision for SAP today.

SAP Financing has already made a very positive contribution to winning new customers. Let us mention two examples.

Hospital Universitario San Vicente de Paul - At this non-profit private healthcare institution, SAP Financing helped to increase the SAP software order value from 300,000 USD to 1,700,000 USD. The solution was expanded to include SAP ERP, CRM, Business Objects and NetWeaver. In addition, SAP Financing was instrumental in avoiding giving a bigger discount, by spreading the total investment over a 5 year repayment period.

Norwegian Airshuttle – Our colleague, Tom Olberg, summarized the impact of SAP Financing in this way. “Norwegian Airshuttle focus on spending their available capital in operations, lease of new planes, and so on. They are growing fast and they are profitable, even if they struggle with the same challenges as the rest of their industry. SAP Financing enabled them make the necessary investment in a state-of-the-art Business Intelligence solution without affecting their cash balance. So, we help them with keeping up the growth in this down economy.”

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SAP Financing: Unit Overview Diagram

3. Sales Tactics

4. Sales Process with SAP Financing

Unit Title

1. Introducing SAP Financing

2. Value Propositions for Different Target Groups

We will now move on to ‘Sales Process with SAP Financing’.

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Phase F-ELead Generation Phase D-C Phase B-A

SAP Financing: Sales Process Integration

TelemarketingInside Sales Executive

Who

?

Create Awareness Extended Payment Plan

Act

ion

Discuss BenefitsExtended Payment PlanPreliminary Credit Check (Pre-screen)

Provide OfferPreliminary Credit Check (Pre-screen)Indicative Offer

Provide OfferFormal credit checkFormal financing proposal

Inside Sales ExecutiveAccount ExecutiveTerritory Sales ExecutiveChannel Sales Executive

Account ExecutiveTerritory Sales ExecutiveChannel Sales ExecutiveValue Engineering

Local Financing Partner

Discuss payment options

How

? Discuss payment optionsAlign with customer requirements

Indicative offer included with price quotation

Formal financing proposal

SAP Financing can make a positive contribution to each of the steps in the sales process, from lead generation through to the final contract signing.

It is of critical importance that you introduce the idea of SAP Financing early in the sales process, and that during every pricing discussion with the customer, the option of an extended payment plan is included.

Whenever a sales person provides preliminary pricing to a customer, it is important to also provide an indicative financing offer. The indicative financing offer provided to the customer is an example of the monthly or quarterly repayment schedule.

To mitigate the potential risk of causing disappointment by promoting financing to customers who will not meet credit requirements, CRM Opportunity records will be identified for preliminary credit pre-screening. The result of the preliminary credit pre-screening will be visible to you on the SAP CRM system.

For those customers that express an interest in receiving a formal financing proposal, it is important to understand that a formal credit check is required by the financing partner. It is advisable to include your local financing partner in the discussions with your customer at this time, so that the financing partner can fully understand the requirements and preferences of the customer, incorporating these into the formal financing proposal.

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SAP Financing: Sales Process Integration

Who can discuss the details with my customer?Financing Partner provides detailed expertise

What information is required from the customer?Financing Partner requires financial information to perform credit scoring

How much time is needed?1-5 days: Preliminary credit pre-screening1-10 days: Formal credit review and proposal preparation

Measure Customer Interaction - SAP CRM MaintenanceCRM is a critical component in the support of the SAP Financing processMonitor program effectiveness Monitor Financing Partner performance

The process of evaluating the credit score requires specific information about the financial state of the customer. The specific legal entity of your customer must be identified, and the corresponding financial statements for that corporate entity must be available to conduct the credit evaluation.

Typically, the financial statements from the three most recent years are required by the local financing partner, who is expert at leading this discussion with the customer.

The turn-around time that you can typically expect is as follows:

A preliminary credit pre-screening is usually performed in less than 5 days, while a formal credit check sometimes requires between 5 and 10 days.

If a formal proposal is requested, then the local SAP Financing partner will provide you and your customer with a price quotation and a financing contract. The financing contract is executed between the customer and the local financing partner.

Our CRM system is the basis for measuring and monitoring the effectiveness of SAP Financing as a sales enabler, and the performance of our financing partners. It is important that you provide regular updates to CRM on your discussions with customers about SAP Financing.

For additional information about SAP Financing, refer to the SAP Corporate Portal and the SAP Channel Partner Portal.

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SAP Financing: Summary

In this session, you have heard about the following topics:The importance of SAP Financing for our customers and for SAPAn overview of the SAP Financing offerValue proposition statements for customers, sales teams andchannel partnersUsing SAP Financing to counter common objections raised by customersSales successes with SAP FinancingThe integration of SAP Financing into our sales process

In this session, you have heard about the following topics:

The importance of SAP Financing for our customers and for SAP

An overview of the SAP Financing offer

Value proposition statements for customers, sales teams and channel partners

Using SAP Financing to counter common objections raised by customers

Sales successes with SAP Financing

The integration of SAP Financing into our sales process

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SAP Financing: Assessment

Please click on the following link to start the SAP Financing web assessment:

http://service.sap.com/~sapidb/011000358700000336822009E

Thank you for your interest in the SAP Financing program. To test your knowledge of SAP Financing, please click on the link to start a web assessment.