Those of you who read my career advice know that I regularly make fun of SAP consultants for obsessing too much about money and not enough about skills. It’s not that I consider SAP folks to be exceptionally greedy; but let’s face it, one of the reasons people pursue SAP as a career is for the bucks, and I’ll include myself in that generalization. Those of you who wish I would set aside the issue of skills and talk about “getting paid” are in luck: this column is for you.

One of the most important questions I get from SAP professionals is: “What is the market rate for ______ skill?” The most urgent version of this question comes from full-time employees or those considering full-time SAP job offers. These folks are concerned about being exploited for their skills as opposed to consulting rates.

Just today, I heard from an SAP financials expert who relocated to a rural area with only one local SAP customer. He is very concerned that his salary is not on par with the market, and he’s looking for some type of objective research on SAP salaries that he can present to his employer so that they can bring their SAP salaries in line with the market.

So what are the market rates for SAP professionals? And how do we go about achieving those rates?

Let’s start by understanding this: there is no accurate, publicly-available information on SAP salaries. Some of the high-level research firms, like Gartner, conduct salary studies for SAP customers, but that information has not been released “in the wild” as far as I know. And of course the accuracy of this data ages quickly with the fluctuations in the SAP marketplace.

My article title gave it away, but the hard-luck news is that there are no market rates, only what particular consultants are willing to accept. We like to think that our skills determine our rates, and that is partly true, but an equally important factor is our geographic range and willingness to travel. Our rates tend to correspond with our leverage, and our leverage comes down to our project options. If we are willing to relocate and/or work anywhere, our ability to secure a competitive rate increases dramatically.

Why There Are No “Market Rates” for SAP Contractors

I’m going to tackle the issue of contracting rates and salaries separately, as the consulting and “perm employee” markets are very different. Let’s start with contracting. We like to think that our contract rate is a function of our skills, but in fact, SAP rates are determined by two main factors: the budget of the end client and the amount of subcontracting “layers” between you and that end client.

The fact of the matter is that some companies (and projects) are just plain cheap. Companies set their rates on external supply and demand, but not solely. They also adjust their rates according to the urgency of their project and the in-house knowledge they can fall back on. Some companies are so advanced in their use of SAP that you are literally up against their in-house competency center. True, the reason they are interviewing you is because they don’t have the exact skills they need internally, but they may feel that a current employee is trainable. They’d rather hire an experienced person from the outside, but if they are fairly confident in their in-house alternatives, it gives them a lot of rate flexibility.

What if you decide to be helpful and clue a client in to the true market rate for your skills?  I’ll bet you can guess the response. The door may hit you on the way out. That’s why it’s better to think about contract rates not in terms of the overall market, but in terms of a series of individualized negotiations. Each situation is affected by a host of dynamic factors that affect your ability to achieve your target rate. For example, I’ve seen many examples where a consultant was able to get a great rate from a budget-conscious client by going directly to the end client and not through an intermediary.

Of course, there are ethical and legal obstacles to “going direct.” More and more, you do have to go through at least one broker to get onto a project for liability and insurance purposes, not to mention that it’s extremely unethical to go around that firm if they were the ones that originally presented you to the client. Even in the rare cases where it is ethically justifiable to go around the approved vendor, that strategy almost always backfires. However, from project to project, even the “layers” you deal with are not the same. Some vendors, for example, have standard markups that will never bend. Whether they are billing the client $80 or $150, they are going to take $40 for themselves.

I don’t think that’s fair. I have been involved in SAP staffing since 1995; one thing I am fed up with is agencies who are in a position to staff projects not because they are ethical or fair, but because they have a signed piece of paper that gives them access to that client. I call these “golf course relationships” and they are nauseating to behold. I personally have no time for anyone that makes money off a market without adding value. On the other hand, some staffing firms are very ethical and well-informed about SAP and price their rates accordingly.

One thing you can do is to align yourself with firms that use an “open book” policy when it comes to rates. I take pride in the fact that SAPtips is always willing to disclose our bill rates to our consultants. We know that if we treat consultants fairly, we can all make money and make the SAP market a better place. There are other staffing firms that share this commitment, so you may want to ask firms what their policies are on rate disclosure before you get too involved with them.

Obviously, rates are tied to supply and demand, and SAP consulting rates are a purer measure of supply and demand than you see on the “full time” side for a number of reasons. One reason is that consultants are more likely to be assessed primarily for their SAP skills, whereas “perm hires” are often subject to more complex criteria, such as compatibility with the corporate culture. The offers you get for “perm” are based on much more than your SAP skills. So on the consulting side, we can come closer to an objective discussion of market rates for certain skills; but again, you can only achieve those “objective” rates if you are willing to travel anywhere to get them, and most of us have geographic restrictions that will affect our rates.

Contrary to what most folks think, contract rates are not a function of generalized demand for a particular skill set. Your SRM skills may be worth $150 an hour on the open market, but if you are limited to the Kansas City area for family reasons, and the only project in Kansas City is a public sector project with several layers and an end result of $100 an hour for your skills, then you are worth $100 an hour.

Most SAP folks seem to think that you can increase your rate by enhancing your skills. That’s correct, but simplistic. It’s more accurate to say that you can increase your rate by increasing the overall demand for your services – I like to call this your “individual demand.” You might be able to increase that demand by enhancing your skills, but you could also increase that demand by expanding your geographical range or your willingness to travel.

Some may be discouraged that there is no market rate you can quote a client to force their hand. But the fact that demand is more individualized can also lead to creative breakthroughs. Example: what if you published a series of articles in your area of expertise? And what if you built on that published work by speaking at SAP conferences and trade shows? Think your enhanced profile and reputation affects your so-called “market rates?” You better believe it! The best paid FI/CO consultant I know speaks and publishes regularly. It’s a lot of extra work, but every time I see him he’s in a good mood, so it must be working.

Why There Is No “Market Rate” for Salaried SAP Employees

Shifting our focus to salaried employees, the answers to “what is my market rate?” are even more elusive. Companies in different geographic areas alter their payscales accordingly. Now, you could argue for a cost of living adjustment, and many do, but most folks making 100K in San Francisco don’t feel like making 60K in Idaho, even if it translates evenly. But there are bigger problems: salary tiers are not dictated by technical skill, but by management level. It’s the job of those swell folks in HR to make sure that the new hires are not overpaid in the context of all those toilers who have been slugging it out for ten years waiting for the corner office to open up. Nothing is worse for corporate morale than a baby face in a fresh suit making more than you the day he walks in the door.  

There was a time when companies offered “hot skills” bonuses for those with SAP and other “hot” technologies as a way of giving folks something extra that couldn’t be compared apples-to-apples. That practice has largely receded. So when you interview for perm jobs, it’s the technical skills that land you the interview, but it’s your perceived management level that has the most impact on your base salary. A project manager with two years of SAP experience is likely to be offered a lot more than a five year functional consultant who has never led a team. For perm positions, I would say that an MBA is worth a lot more than an SAP certification, as it might bump you up a level from day one, and it will certainly aid your advancement once you sign on. The opposite is true for contracting. I’m not saying that an MBA is a liability for a contractor, but if I were an SAP contractor, I’d rather have more project experience and a couple of relevant SAP certifications than an MBA.

Then we have the companies that expect us to take a discount just for the privilege of being associated with their brand name. This is the “part of your paycheck is putting our name on your resume” gang. A few years ago, I got a call from a big-name company that wanted to hire SAP professionals at bargain-basement salaries. When I told them their salaries were not competitive, they said they didn’t care. They believed that what their name had to offer made up for the pay discrepancy. Those who didn’t feel like taking less were not “their kind of people” anyhow. The low pay was a litmus test to ensure that those who signed on were drinking their corporate Kool Aid.

Not all companies do business this way, but this story helps to illustrate why it’s so hard to generalize about what SAP skills are worth. Adding to the complexity is the “internal center of excellence” concept. As noted, companies that are running a mature SAP instance always have the option of training someone internally versus paying to bring experienced talent on board. When they find the outside person’s salary demands excessive, they tend to look back at their own resource pool for bargains. So when a company offers you a lower salary than you wanted, bringing them data on what SAP people are worth on the open market isn’t going to change their resolve (other than to consider rescinding the offer and giving it to a so-called “team player” instead). Even if we had truly objective SAP salary data, it wouldn’t do us any good. Companies are not going to pay an SAP pro more than the person they are reporting to.

More often than not, companies are well aware of “what the market will pay.” When they offer less, they have their reasons. Different “human capital” philosophies also affect pay scales. Some companies believe in over-paying the market in order to make their people “less recruitable” by competitors. Other firms are more focused on short-term budget parameters, and believe in rewarding people *after* they have paid their dues.

Getting The Best SAP Rate Possible

Now that we’ve covered the reasons why “there is no market rate,” we’ve got one more topic to go: how do you leverage your own “individual demand”? For starters, your goal is not to talk money until after the interview. At the least, you want to get to the end of a highly successful interview before you start talking money. Sure, it makes sense to get some preliminary feeling for the rate or salary, especially if you’re flying in from somewhere. But at this point, you’re just looking to make sure you’re “in the ballpark.” Once the interview is complete, your leverage with a particular company is at its highest, assuming you have impressed them. At that point, do your best to “get paid” and get the best offer you can. The art of getting a great offer goes well beyond this column, but I did want to give a general sense of when the iron is hot for salary talk.

Since I preach the value of demand, is it appropriate to play one offer against another? I think it’s ok to let companies know you are considering multiple offers once you reach the offer stage. Nobody likes a mercenary, but then, nobody wants to hire someone that is sitting around waiting for the phone to ring. Companies want to believe they are hiring “the best of the best” and they can be motivated (in a positive manner) if you let them know what kind of “action” you have. It’s ok to be open about the specifics of your other offers, but I would also emphasize the non-financial aspects you are considering. Even when deciding between contract offers, it’s appropriate to talk about skills exposure, commuting issues, and other considerations that aren’t about rates. This makes you seem well-rounded and less cutthroat.

When it comes to “leveraging your demand,” go through one or two cycles and take the best offer on the table. Giving a timeframe and sticking with it does wonders for your reputation also. Most companies will wait a week for you to decide – if you honestly stick to that timeframe and check in to assure them they will have their answer. The wrong move is to keep drawing the offer cycle out. Be clear and honest with all parties and you should be able to use multiple offers to your advantage without burning bridges.

One thing I do feel strongly about is that you earn your money during the negotiation stage when you work out your base salary. This is especially important for “perm” positions where you can find yourself locked in for a long time at the wrong salary. Too often, people settle for a lower base than they are comfortable with in exchange for the promise of bumps in pay and performance reviews down the line. Mostly it’s a load of junk. If a company is going to reward your performance over time, that’s great, but make sure you are very happy on the front end, so that if they don’t keep their end of the deal long-term, you can leave without feeling you got played.

Companies have created this “get paid on the front end” game with their ruthlessness on the back side with downsizing and clever bonus reducations, so it’s fair game to be firm about what you want before you sign on the dotted line. Of course, what you “hold out” for may not be just about money - it might be about your project role, your benefits, or even relocation assistance or travel expenses.

Even if a company tells you that its salary structure or contracting budget is fixed, you might still be able to win some extra compensation that is allocated through a different channel (a car allowance, for example). Again, the key is to be creative, and make it clear what it will take to bring you on board. Don’t be Pedro Martinez, who told the Sox exactly what it would take to get him, got that final offer, took it to the Mets and said “can you top it?” When you tell a company what it would ultimately take to win you and they step up to the plate, honor it. And speaking of honor, while I support aggressive negotiations, I don’t support walking away after a contract is signed.

I know a lot of SAP consultants who broke their bond on paper. I would never work with them again. Just recently I was working with a CIO in Atlanta who was burned by a consultant years back who signed a contract and didn’t show up. Years later, when this consultant applied for a major project management role, the CIO vetoed the interview. The consultant never knew why the interview was suddenly cancelled. Your past does haunt you when it comes to walking away from things you sign. I’ve heard a lot of excuses for this kind of thing and they never wash.

I veto resumes that come into SAPtips from folks who burned me in the past. They must wonder why things didn’t work out when they sent their resume in. People have long memories when it comes to breaches of trust. The only “walk aways” I’ve ever had any sympathy for are those who agree to relocate and at the last minute get an offer in their home town. These folks typically feel terrible but decide to keep their kids in the same schools, keep their home, and turn down the new position. But we need to save the “gotta back out” card and play it sparingly.

I hope this column has helped to clear up some of the reasons why “SAP market rate” is elusive. I also hope the ideas for increasing your own “individual demand” were helpful. Obviously I realize that we can make some general statements about what FI skills are worth compared to CRM, ABAP, etc. But while SAP market rates may make for interesting “what are we worth?” talk at the trade show buffet, in the end, establishing your market demand is an individual project with many variables, not the least of which are the sacrifices you are willing to make to maximize your options and enhance your overall skills.