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11/6/2008
05:02 PM
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SAP Outlines Updated Maintenance Fee Plan

A troubled economy, tight IT budgets, and pressure on software companies to deliver healthy profits have created a perfect storm for change to ERP software fees.

SAP is trying to make amends. It's working with user groups to get feedback on SAP Enterprise Support and said that as a result of those discussions, it's now offering up to five days of remote (telephone and online) advice per year by software architects on enhancement package implementations.

SAP also pointed out today in a press release the things it thinks customers will appreciate when they move to the new service offering, in the areas of custom code support, better help with software testing, a recommendation report SAP will supply each year, plus guidelines for configurations. In a statement, AMR analyst Bruce Richardson said these were "hidden gems" in the new support program that are "underhyped by SAP."

Through meetings with its SAP User Group Executive Network (SUGEN), representing 12 global SAP user groups, SAP has learned that "90% of respondents have not yet realize the full extent of the SAP Enterprise Support offering," SAP said in a release. It's now working with the group to establish key performance indicators so SAP and SUGEN can regularly evaluate the progress of those KPIs against customers' expectations and adjust the support program "until quality measures are achieved."

But will it be enough to make customers feel good about what they're paying? In a September post to an InformationWeek blog post, Forrester's Wang said maintenance profit margins are around 85% for the big ERP vendors, and "it's a shame that customers do not demand third-party maintenance options or that more of their maintenance and support dollars go back into R&D investment." He added, "Businesses may have to get used to avoiding vendor lock-in as competition reduces the level of competition in the marketplace."

NetSuite, meanwhile, is looking to take advantage of SAP customer disgruntlement. NetSuite, which delivers ERP in a software-as-a-service-model, announced Business ByNetSuite on Thursday. The program guarantees SAP R/3 customers at least 50% off their current annual maintenance and support agreement when they switch to NetSuite.

Here are some examples of how an SAP 6.0 customer would be impacted by SAP's new 9-2 maintenance plan announced Thursday:

  • Those paying a 17% maintenance for Standard Support will still be moved to the Enterprise Support program at 18.3% in January, to reach 22% in 2012. The fee would stay at 22% until 2015, with the option to keep it another two years at 24%.
  • Those that came on board this year with a 22% fee for Enterprise Support will continue to pay that until 2015, at which time they'll have the option to keep the contract another two years at 24%.

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