Auckland Council looks for savings in confidential SAP renegotiation

Auckland Council looks for savings in confidential SAP renegotiation

Report on renegotiations to be delivered today with public excluded from meeting

Credit: Supplied

Auckland Council is renegotiating its contract for the extensive suite of software it uses from German giant SAP.

A council meeting agenda says the renegotiation aimed to review the current SAP agreement to better suit council’s needs and to better align with SAP’s commercial and technical roadmap.

SAP and the council last conducted an in-depth review and renegotiation of its license structure in 2015. That process resulted in a $33 million in savings over 10 years.

The end result meant the council would spend $92 million with SAP over the following decade instead of $125 million.

Since then, however, council had invested in a number of SAP’s cloud delivered software products including Ariba and Success Factors, and implemented S/4 HANA, SAP’s latest version of its on-premise software.

The council spends $280 million a year on ICT services including spending by council controlled organisations such as Watercare and Auckland Transport. 

SAP was the council's second largest ICT supplier in 2020 by value, receiving $10.8 million during the year. It was pipped by Spark-owned Revera, which billed $13.5 million.

"Since the relationship was last reviewed, both SAP and council have developed their respective strategies," the new agenda said.

"SAP now invests most of its R&D into cloud, while council has undergone a transformation in how it delivers services.

"SAP and council have been negotiating to both deliver savings and enable the transition to SAP’s latest products at a lower cost."

A report containing analysis and advice for the licensing renegotiation is to be delivered in confidence to a meeting of the council's strategic procurement committee this afternoon for the renewal of its support and maintenance agreement with SAP for a period of one year.

"Since August, both parties have been reviewing and developing a new commercial construct that will allow council to better access SAP’s newest offerings while saving money," the agenda said.

"This work is nearing its conclusion."

Auckland Council said the information contained in its report on the SAP licensing renegotiation enabled transparency on the topic due for discussion in the public excluded part of the meeting.

"Note that the confidential report contains information that could prejudice the council’s position in negotiations with suppliers.

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Tags SAPAribaAuckland CouncilSuccess FactorsS/4 Hana



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