When SAP announced in 2008 that it would increase prices for SAP Enterprise Support, customers weren't happy. Concerns rose about whether it was worth paying 22% instead of 17% of net licensing fees.
The news didn't surprise SAP, according to Bill Wohl, the vendor's vice president of field and product communications. When Enterprise Support was announced, he said, too much focus had been placed on the price increase of support fees and not enough on what customers would be getting from them and why they needed the service -- including access to 24/7 SAP support and the aim of solving any IT problems, regardless of whether they had to do with SAP's software.
SAP has since reinstated a Standard Support offering that will cost 18% of net licensing fees and will run alongside Enterprise Support, which will eventually cost 22% by 2016.
In this podcast, Wohl explains why SAP made the decision in 2008 to introduce SAP Enterprise Support and why the vendor thinks that customers, even those running on SAP R/3 releases, will find value in the offering, even if not right away.
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Editor's note: The following Q/A is a partial transcript based on the podcast with Bill Wohl. Please contact email@example.com with any questions.
SearchSAP.com: Where is the value in this new offering for SAP customers still on SAP R/3?
Bill Wohl: The value of Enterprise Support for some customers is immediate and direct, and for other customers, it may come over time. Take a step back and take a look at what's happening in the market. What we've been seeing, generally, over the last couple of years has been a dramatic shift by customers more and more to a services-oriented world, an SOA-based world, and customers are more and more connecting their enterprises to solutions that are delivered by partners, by third-party providers or even legacy applications.
And the more that happens, the more we are seeing input from customers that they want their primary enterprise supplier -- and in this case it's SAP more than any company in the industry -- to take responsibility for problem identification resolution on an end-to-end basis.
So no longer do companies expect SAP to solve problems that come up from a support perspective just for SAP, they want SAP to help them figure out what's working and what's not working in their enterprise, whether it's an SAP or non-SAP product. And that is the primary driver for Enterprise Support -- this concept from customers that they want to manage down the cost of managing their environment, and they want to shift as much as possible of the responsibility for that to their primary trusted vendor, SAP.
And because customers want us to do this end-to-end solution support -- not just during the day, but on a 24-hour basis -- we began to think about a support model and a support infrastructure that would allow us to take care of our customers on this end-to-end basis.
Because, put very simply, customers want to pick up the phone, call us, and figure out how to solve the problems that they're facing. This goes way beyond what Standard Support at 17% was designed to do.
SearchSAP.com: What specifically will SAP Enterprise Support do to help customers get a quicker response time from SAP?
Bill Wohl: The methodology of Enterprise Support creates an infrastructure, that is the tools and training and techniques of our people, which has a different perspective than before. And that perspective allows us to work with a customer to figure out where the problem is coming from, even if it's not within SAP. That in itself is one of the most dramatic changes we're delivering to customers.
Secondly, what customers want is a team of support professionals who understand their unique business. So rather than a named SAP representative that's available to them only during the normal working hours of their business, they get an SAP organization that's prepared to respond to service requests, regardless of the time of day or which country the customer is located in -- a true 24/7 response level for mainstream maintenance.
SearchSAP.com: What's the most misunderstood aspect of SAP Enterprise Support?
Bill Wohl: I think people have focused too much on the change in price without really looking behind the scenes and understanding what the customer support challenge really is. If we had simply left our service offerings alone, and brought our prices up to the industry standard -- I think people have lost sight of the fact that for many years SAP has held the line on support costs -- by coming up to 22% even ramped up for over four years, we're coming up to the competitive position.
You can look at the support prices offered by Oracle and Microsoft and any other company in our space. And 22% is roughly the industry standard price. People need to look beyond the price issue to what comes with the offering and again understand that not all customers have the same support requirements at the same time, but that SAP has a very well-proven history of having a single baseline standard offering.
We've now just adjusted that standard offering to what we think the customer requirements really are. I also think that there is a lot of attention focused where there is a lot of noise. And there has been appropriate press coverage for the few voices that have said loudly, "We don't think this is the right thing." But if you look beyond that noise to what we're seeing in our individual customer conversations, and what very smart analysts who really understand these issues are really beginning to say, not only publicly but also in their printed research, there's a story behind the story. And that is what customers expect from us is what we deliver with Enterprise Support. Which is what they need today and what they need tomorrow packaged in an offering that is at the right price point based on the competitors. Our offering has a tremendous value for customers.
And the onus is on us and industry analysts and the consulting world to help customers rethink how they manage their IT process so they get the best out of Enterprise Support. We remain convinced, although it may be hard to put real dollars on it or real numbers on it soon, that there are opportunities for customers to actually save money as a result of using Enterprise Support if they can create a standardized way of managing their IT environments. And for us, the true success looking out several years is to see whether we've been able to help customers manage their overall support costs in a downward direction.
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This was first published in October 2008