This is the second in our two-part series addressing the question. In Part 1 we covered the 'better' question when considering complexity, functionality, and flexibility. This time we focus on the financial considerations.

Financial Considerations

If I could have a few dollars for every time a potential software customer has told me that cost and price isn’t an issue, I could shout a lot of friends and a lot of coffee. In the end, the cost is an issue; in most cases, it must be justified through a business case.

In short, cost justification and cost comparison are nearly always required for software acquisition. 

Software costs come in two forms: upfront costs and ongoing costs. The combination of these two costs provides the overall cost of software or the Total Cost of Ownership (TCO).

Here are some considerations in comparing the TCO of third-party and SAP native solutions

Planting costs – the upfront costs

• License
• Hardware and infrastructure and Implementation
• User and administration training

License

Unlike third-party solutions, most SAP native IT automation solutions are free of license fees, especially those within Solution Manager. However, this is not always the case. For example, SAP LaMa and SAP Focused Run are licensed separately from Solution Manager and are not free.

Hardware and infrastructure and Implementation

Third-party solutions are usually speedy to install and set up, whereas most SAP solutions require a significant effort. In some cases, months of configuration and customisation before productive use. An example is SAP Change and Release Manager (ChaRM) which, for medium to large enterprises is a significant project in and of itself lasting many months.

User and administrator training

Third-party solutions are intuitive and straightforward, with user training ranging from an hour or two of familiarisation to several days. This is not the case with SAP solutions. These tend to be quite complex requiring hours, if not days of user training. The same goes for administrator training. Although more extended, the relative time required is similar.

Weeding and feeding costs

• Administration
• Ongoing maintenance

Administration

Unlike the administration of third-party solutions which is straightforward and relatively time efficient, usually requiring minimal effort and few, if any specialist resources, SAP solutions require significant ongoing administration from experts. Adjustments and non-standard changes are often complex and not easily incorporated.

Ongoing maintenance

It’s not been easy for those managing SAP solutions within SAP Solution Manager. Constant upgrades and platform changes have significantly disrupted SAP solution administrators. Not only have they had Solution Manager upgrades to contend with, but often an entire reimplementation of the solution to deal with too, e.g., ChaRM. There is none of this to worry about with a third-party solution.

Conclusion

So, are SAP native solutions cheaper, and overall, more cost-effective?

Some SAP native solutions are cheaper, they are free. Others are more expensive but have a broader use case. e.g., SAP LaMa vs an automated system copy solution.

Things like set-up, training and administration are nearly always quicker and more straightforward with third-party solutions, and the same can be said for ongoing maintenance.

Once all the numbers are in, which can be pretty difficult to anticipate in the case of SAP solutions, the three-to-five-year costs of third-party solutions relative to an SAP solution can reveal a lot; that which looks lower-cost upfront can be far more costly in the long run.