SAP's reinstatement of a lower cost maintenance and support option is good news for customers, as well as a sign...
By submitting your personal information, you agree that TechTarget and its partners may contact you regarding relevant content, products and special offers.
that the vendor is starting to put more stock in building customer relationships.
However, SAP's decision to discontinue the benchmarking program it planned to use to justify the value of Enterprise Support was met with dismay by customers and analysts.
"The KPI program is more important than ever. Understanding value in the face of options becomes critical," said Bridgette Chambers, CEO of ASUG. "If those KPI programs are interrupted or supported with any less zeal, then I think that it's a loss, and I would urge SAP to consider the importance of them."
But the SAP KPI program wasn't working because SAP never got enough customers to join it, making it very hard to standardize the data, according to Altimeter Group's Ray Wang, one of the leading voices on the maintenance and support issue. SAP itself has said it was too difficult for customers to participate in the program.
"I think you always underestimate the amount of effort involved in a start-up. It was probably a little more effort for the customers than we anticipated," Janet Wood, executive vice president of SAP Maintenance Go-to-Market, said in an earlier interview.
It's a quandary for SAP. Now that customers have a choice, the stigma of a forced cost increase is gone and SAP may actually have the opportunity to show customers that Enterprise Support could be worth their money.
"I think that if SAP walks away from the discussion about the value of Enterprise Support, it's losing a huge opportunity in the market," said Joshua Greenbaum, principal of Enterprise Applications Consulting. He added that, while he's aware of some internal efforts within the company to build a value proposition for Enterprise Support, "if the KPIs are gone, what's replacing them?"
Also, the value that customers receive for their maintenance and support dollars is the larger question that the Enterprise Support affair has stirred up. That question won't go away just because SAP customers now have a choice of a cheaper maintenance and support plan, according to Helmuth Gümbel, managing partner at Strategy Partners' International.
"For about two years, customers have been deeply analyzing what they get for the money they pay," he said. "That kind of thinking has taken place and I think it's going to have a lasting effect. I believe we are at an inflection point in the industry."
Enterprise Support may make more sense -- this year
At least this year, it doesn't make much sense for customers to switch to Standard Support from Enterprise Support, analysts agree. For the 18.3% net licensing fees price tag on Enterprise Support, customers get far more for their money than with Standard Support at 18%.
Down the road, there are a number of things that customers should keep in mind in figuring out whether Standard Support or Enterprise Support is a better option.
Increases in Standard Support maintenance costs will be based on the inflation rate in the country that holds the respective contract. On the other hand, SAP Enterprise Support costs will increase on a staggered schedule, winding up at 22% by 2016.
Now that SAP is tying cost increases in Standard Support to inflation, or in many cases just enforcing provisions in existing contracts to that end, there is a chance that Standard Support costs in the long run could actually wind up close to Enterprise Support, because there's good potential for an inflationary wave ahead, Gümbel said.
"Then, nobody asks for standard maintenance anymore," he said. "That, I think, is the thinking of SAP."
Customers without plans to upgrade their SAP systems may want to use Standard Support for the next 12 to 18 months, giving them more time to decide whether to move to third-party maintenance, Wang said.
In turn, customers who outsource application management should take the opportunity to figure out whether Enterprise Support will save money in the long-run, according to Forrester Research's Duncan Jones, and use that as leverage to negotiate lower rates with their hosting providers.
ASUG is planning a series of webinars to help customers better determine what to do, Chambers said.
All in all, the move shows that the tide is turning at SAP.
"SAP as a company is starting to change in terms of responding to customers," Wang said. "They've spent a lot of time on this problem. It's hard to think of any other vendor that would have done that."