Strategic CIO // Executive Insights & Innovation
Commentary
10/21/2009
05:08 PM
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SAP Salvages Maintenance Contract With Siemens

When software vendors issue a press release on a deal, it's usually for a new customer win. But after some scuttlebutt last month about souring negotiations between SAP and marquee customer Siemens, SAP decided to put out a different type of release Wednesday: Siemens has renewed its maintenance contract with SAP.

When software vendors issue a press release on a deal, it's usually for a new customer win. But after some scuttlebutt last month about souring negotiations between SAP and marquee customer Siemens, SAP decided to put out a different type of release Wednesday: Siemens has renewed its maintenance contract with SAP.In September, a German business magazine's Web site reported that Siemens was dropping SAP as its provider of maintenance and support for SAP applications and was looking at other options, including service contracts with third-party providers HCL, IBM Global Services, and Rimini Street. The implication was that Siemens was dissatisfied with the cost and/or quality of SAP's services. SAP issued a statement that didn't deny any issues related to the contract, but said "SAP is currently working with Siemens to deepen the relationship in a multitude of areas."

Now, SAP is saying it never lost the deal, and in fact, implies it ended up with more than it had before. In addition to renewing the contract, SAP reported Wednesday, Siemens also tapped SAP to support some of its in-house software that connects to its SAP apps, and extended its contract to include SAP's "MaxAttention" support, a platinum-level service that provides "onsite intensive customized support services." SAP also said Siemens purchased its supplier relationship management software.

But a month ago, as my colleague Bob Evans blogged, it appeared there were some cracks in SAP's important relationship with Siemens, which in addition to being a large customer, is also a reseller and integrator of its software in certain industries. Besides the German pub's report, Siemens chose SuccessFactors for its human resources system over SAP and other vendors in June. The deal for SuccessFactors, delivered in a software-as-a-service model, covers Siemens 420,000-seat global workforce.

Why does this all matter? Because scrutiny has intensified on the annual software maintenance fees charged by large, dominant software vendors, at a time when CIOs face shrinking IT budgets and SaaS vendors offer competitive products that don't require the same investments and labor related to on-premises software maintenance.

It's hard to know what happened, since the German pub used unnamed sources. Did Siemens leak the "news" of a contract gone bad to get what it wanted from SAP? Yet if SAP's contract with Siemens for services ever was in danger, it appears it did what was needed to keep it.

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