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SAP Plugs Profit Hole With Support Price Hike
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FritzNelson
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FritzNelson,
User Rank: Apprentice
2/7/2013 | 2:23:25 AM
re: SAP Plugs Profit Hole With Support Price Hike
I can hear Seth Ravin (Rimini Street CEO) chuckling to himself right about now . . .
D. Henschen
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D. Henschen,
User Rank: Author
2/6/2013 | 11:20:37 PM
re: SAP Plugs Profit Hole With Support Price Hike
Digging down on SAP finances, last year's margin was impacted by a $750 million set-asside tied to the TomorrowNow lawsuit, as well as the acquisitions and increased hiring. Bottom line: SAP profits aren't as low as that 25% figure suggests, but they were still below 2011 levels. They need to go the other direction to meet 2015 goals. I'm not convinced this 5.5% increase won't be significant once we get to 2015 -- even if it's as a further inducement to step up to Enterprise Support.
cbabcock
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cbabcock,
User Rank: Strategist
2/6/2013 | 9:16:20 PM
re: SAP Plugs Profit Hole With Support Price Hike
The larger the customer base, the more margin that 22% figure means. Very large customer bases for a single application mean problem areas get well defined, the solution database gets more data and it becomes easier for the support provider to deal with issues. Customers get volume discounts for big license orders but the inverse isn't true. They don't get volume discounts when the vendor enjoys a large support fee customer base. More competition is needed. Charlie Babcock, InformationWeek
Cindi Howson, BIScorecard
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Cindi Howson, BIScorecard,
User Rank: Apprentice
2/6/2013 | 7:56:32 PM
re: SAP Plugs Profit Hole With Support Price Hike
In general, 22% per year for support is not unreasonable and is still below the industry average. While Oracle and SAP may charge 22% of net, Microsoft and IBM charge 24 to 25%. In the side by side analysis we do for BI platform vendors, some are higher and are based on list. BUT the big problem here is that SAP support ranks in the bottom tier according to our survey results, so it's hard to justify an increase without also providing a good level of support. Support for ECC may be different. Innovation, both in ECC and BI, are funded by maintenance dollars and that too is a mixed bag. In BI, the newest products like Hana and Visual Intelligence cost customers extra.


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