SAP Postpones Maintenance Price Hike

Although the vendor says the benchmarking program shows the “clear value” of the new Enterprise Support program, price increases are put on hold.

Posted on Dec 01, 2009

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SAP today announced that it has postponed planned price increases for its Enterprise Support maintenance program, even as it said related benchmarking efforts “have shown clear value to participating SAP customers.”

The company has formed a task force that will “reach out to customers and user groups” in an effort to “maximize customer value from SAP’s entire support offerings.” The task force, an SAP spokesman told Managing Automation, is intended to “look for ways to engage a broader segment of customers.”

SAP said it plans to report on the task force’s progress at the beginning of 2010. “Until then, a decision on pricing for Enterprise Support has therefore been postponed,” read a statement.

This latest move marks the second time the enterprise software giant has postponed or extended implementation of the maintenance price increases it announced in July 2008. At that time, SAP announced the broad rollout of Enterprise Support, which, for most customers, eventually will carry an annual price tag of 22% of the initial software license charge. Most customers had been paying a 17% annual charge.

In July 2008, SAP announced a tiered increase for customers moving from Basic Support to Enterprise Support: 18.4% effective January 2009, 19.8% in 2010, 21.4% in 2011, and 22% beginning in 2012.

In addition to the higher price tag, the Enterprise Support offering includes a new version of the company’s Solution Manager and a new operational methodology, RUN SAP, which, among other things, allows customers and SAP to identify and fix problems that crop up when third-party products are integrated with SAP applications. The new Enterprise Support offering also includes tools and services that support root cause analysis of those problems, as well as service-level agreements for problem resolution and a 24-hour-per-day, seven-day-per-week support adviser service. The previous Basic Support program did not include service-level agreements, 24-hour-per-day response, or adviser service.

SAP’s proposed maintenance price increases, however, prompted widespread concern among its customers. Those concerns have been exaggerated in many cases by the recession, said Ray Wang, an analyst at Altimeter Group. Many organizations are looking to reduce maintenance and other software costs in order to fund new technology innovation, he said today.

Responding to customer concerns, SAP earlier this year announced a benchmarking program designed to demonstrate that the new Enterprise Support offering delivers value commensurate with the price increases. Under the benchmarking program, SAP and the SAP User Group Executive Network (SUGEN), a federation of 12 SAP user groups, benchmarked 100 customers’ use of the Enterprise Support program. Using 12 agreed-to key performance indicators, SAP and SUGEN measured reduced costs and other efficiencies that those customers received from Enterprise Support in domains such as business continuity, total cost of operations, and business process improvement.

At the same time, SAP committed to delaying by three years full deployment of the Enterprise Support price increase. Previously expected to kick in gradually through 2012, the increase in SAP’s annual maintenance charges would be rolled out through 2015, SAP said, assuming the company demonstrated the value of Enterprise Support through the benchmarking program.

Today, the SAP spokesman said the benchmarking program “met the objectives that were defined,” adding, “we are satisfied that the results are positive in meeting the objectives.”

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