A bruising third quarter convinced German software vendor SAP that it needed to take swift action. After license sales dropped 31 percent, the fourth straight quarterly decline, SAP started selling new kinds of contracts that are easier on customers' wallets.
Not long after the end of the period, which closed in September, SAP began pitching "flexible licensing agreements," to 500 customers that spend at least $2.2m (Ã¢"šÂ¬1.5m) annually with SAP. The arrangements let customers pay quarterly or monthly fees to use SAP products, instead of buying the software outright and paying for it at the outset.
SAP for years has been giving big customers some leeway in how they pay for software, but the recent slump convinced the company that the flexibility needed to be extended more broadly. These subscription licenses are appealing to companies that may not have the budgets to spend hundreds of thousands, or millions, of dollars in one sitting for the rights to own business software in perpetuity.
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