SAP is still attempting to prove to its customer base that its costlier Enterprise Support is worth the money.
Today, the company detailed its work with what is now called the Enterprise Support Advisory Council. Groups of roughly a dozen customers are working with their local user groups to identify certain business process and technical improvements they would like to make in their organizations. A dedicated staff at SAP then helps them implement the improvements using Solution Manager. SAP is calling it “the next generation of the Enterprise Support benchmarking program.”
Customers can access best practices from these projects through the SAP support portal (which requires a username and password for the SAP Services Marketplace). Lessons learned and customer references will also be communicated through local user groups. Analysts have said there will be social media components to the initiative as well.
“Customers don’t lie to customers,” said SAP’s Norbert Nowak, who is heading up the charge for SAP.
SAP’s rollout of its richer, but costlier, support and maintenance offering has been surrounded by controversy. In 2008, SAP ditched its lower-cost support offering, at 17% of net licensing fees, and announced that all customers would be moved to Enterprise Support at 22% of net licensing fees. After an outcry from its customers, SAP worked with SUGEN to start a benchmarking program. Enterprise Support costs would increase on a graduated timeline only if certain KPIs were met to the satisfaction of a designated group of customers using the new support offering.
In January, SAP reinstated its tiered maintenance and support offering. Former CEO Leo Apotheker said it would end the SUGEN benchmarking program now that customers had a choice.
Since then, SAP has continued to work with groups of customers worldwide, gleaning Enterprise Support-related best practices and case studies now available online through the SAP support portal.
SAP still won’t tie Enterprise Support cost increases to findings from the Advisory Council. Customers found it too difficult to track all of the KPIs laid out, so SAP couldn’t get sufficient data on which to base cost increases.
For example, Burton, a Burlington, Vt.-based snowboard and gear manufacturer, was an original member of the Benchmarking program and is now a member of the Customer Advisory Council. Kevin Ubert, Burton's CIO, said it felt as if SAP was sending Burton 100-plus page documents related to the benchmarking program every couple of days.
Given the realities of staffing and other project demands, Burton has focused on one or two projects at a time and leveraged SAP for help with improvements.
At Burton, “strengthening the foundation,” taking advantage of the software it has already implemented, is a key initiative. That includes ERP 5.0, AFS, NetWeaver 7.0 (BW and Enterprise Portal), CRM 5.0 and Solution Manager 7.0. But with IT staffing down 25% in the last two years, it hasn’t been easy. Being a part of the Advisory Council has helped Ubert to improve some key business areas. One project even led to “a hug and a kiss on the cheek” from a business user, he said.
“It’s actually provided some valuable guidance that’s helped us cut through all the stuff that’s out there,” Ubert said.
Enacting some of the changes helped Burton cut the available to promise transaction from two hours to 20 minutes. It also reduced the CPU and power utilization rate by 12%. It reduced the database size from 1.2 terabytes to 900 gigabytes by finding tables where the data could be archived or deleted.
SAP pounds the pavement for Enterprise Support
SAP meets with each region’s advisory council locally. So far, it has had six face-to-face meetings with the councils -- in Newtown Square, Orlando, Walldorf, Mexico City, and in Tokyo. Additional feedback sessions are scheduled again this year in Walldorf, as well as Brazil and Australia.
ASUG’s CEO Bridgette Chambers is heading up the North American group, which has 14 members. Here, the key support priorities are improved system and business performance, improved user efficiency, and reduction in time to issue resolution. That's based on ASUG’s annual user survey, Chambers said.
The Customer Advisory Council represents a good step in helping customers get better value from Enterprise Support by reducing the total cost of ownership of their systems, analysts say. There is no doubt that customers' support issues can be extremely complex and extremely pervasive, and the options for dealing with them are not as simple as everyone would like, said Joshua Greenbaum, principal at Enterprise Applications Consulting.
Continuing to work with individual customers to identify where Enterprise Support is working and where it could work better is a good starting point for what is the ultimate goal of helping customers lower TCO.
“It’s a long process of engaging the customers and opening up on the vendor side,” Greenbaum said.
But key challenges remain.
For one, SAP’s vision relies on a strong installation of Solution Manager. Most customers have implemented only the bare minimum of Solution Manager functionality to download support patches from SAP.
Burton hadn’t implemented Solution Manager before becoming a part of the original SAP KPI program, and it was a significant time investment up front, Ubert said. But it was easier to implement and set up than anticipated – requiring about 1½ full-time equivalents for about two and a half months.
In turn, SAP has been touting many “benefits-focused” programs lately – including its Value Engineering program. It faces a challenge in keeping from confusing customers and needs to tie them all together.
“Seems like SAP has a lot of great offerings, but they’re not that well integrated,” said Forrester Research principal analyst Liz Herbert.
In all, there’s a growing recognition that SAP and every one of its big competitors have to make a case for what the value is of the maintenance income they’re taking from the customers, Greenbaum said.
“It’s clear that SAP and SUGEN and the users in general need to work more closely together to make sure Enterprise Support is well understood and reaping the optimal value for the customer,” he said. “That is a journey, not just a destination, and this is reflective of the journey they need to take.”