5 Best Practices for Renewing SAP AMS Contract

February 18, 2021by Tech Innovation Forum1

SAP Application Management Services (AMS) offers many key benefits to a company in managing and maintaining its SAP ERP system. However, SAP AMS can become expensive over the years. Therefore, companies must periodically review their SAP AMS costs and identify opportunities to lower costs or maximize value from it. And what better time than the contract renewal?

In the present situation, all companies are looking for ways to lower their IT costs. This applies to those businesses as well as others who have huge SAP implementation in their processes. If you are using SAP Application Management Services of a company to maintain your SAP implementations, then the contract renewal period is a great time to review, renegotiate and optimize value from your contract.

Optimizing the value doesn’t always need to be about reducing the costs but also about getting more value from your vendor. So, if your company’s SAP AMS contract is up for renewal then it is time to relook at it and see if you can maximize value from it. Also, given the uncertainties in the world, now is a good time to look at early renewals of expiring SAP AMS contracts to obtain more favorable financial terms or value added services.

Gemini Consulting & Services is a global SAP partner. We provide SAP implementation and support and have been helping businesses and public organizations to optimally manage their tech infrastructure. We have developed a value driven support model for SAP AMS and are perfectly positioned to help you at every step in your SAP implementation initiative. To know more about our SAP AMS services, click here.

Factors to Consider While Renewing Your SAP AMS Contract

SAP implementation is a one-time exercise. It might look costly but if you compare it with the SAP AMS contract, which runs for several years, you will find that the SAP AMS costs easily exceed the implementation costs. That’s why it is important for you to periodically review your SAP AMS vendor and assess its value in your business. Here are 5 best practices to follow while renewing your SAP AMS contract.

  1. Review Your Existing AMS Needs: The AMS needs keep fluctuating. If your company has recently expanded or downsized, your SAP AMS needs will increase or decrease accordingly. If you are running on excess AMS capacity, then you need to revise your contract agreements and choose a lower cost SAP AMS service plan and vice versa.
  2. SAP AMS Support Model: Companies offer various SAP support models, including managed services, staff augmentation, co-sourcing model etc. Check the support model your vendor is working under and its effectiveness. Review if you are getting optimum value from the existing support model or do you need to switch to another model to meet your business needs.
  3. Leverage Automation: Technology is constantly evolving and adding new capabilities. SAP is also continuously enhancing its products and applications with new features to optimize automation. Similarly, your SAP AMS provider must have automated a lot of tasks that were previously done manually. Identify what and how much automation is used to support your SAP systems and see if your SAP partner is willing to share the benefits of automation with you.
  1. SAP AMS Delivery Model: Companies offer mainly three types of delivery models. They are local, offshore and a mix of local and offshore models. The local delivery model is almost expensive irrespective of the location. If your SAP AMS partner is providing your local AMS support, then you can review your business needs and see if you really need local support or even an offshore or mixed support model (hybrid) can meet your needs without compromising on the quality.
  1. Service Quality & SLA Commitments: One of the key criteria to assess an existing SAP AMS partner is to check its last year’s performance and commitment to Service Level Agreements. Assess the vendor’s performance on key metrics that matter to you and see if they have met it to your satisfaction. If the company is falling back on its SLA commitments, then you have to find a new SAP AMS partner.

With SAP being a popular enterprise platform, there is massive competition among SAP AMS providers. This has led to a price war. So, there’s always a scope to reduce your SAP AMS cost or get more benefits at the existing cost. If your vendor is not offering you the best price or increased benefits, then it is time to look for a new SAP AMS partner and restructure your spending.

Companies generally don’t deeply review their AMS provider if it is working well as it might involve efforts to launch an RFP and select an SAP AMS vendor but considering the SAP AMS spend it would be worth the effort and help you save top dollars.

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