SAP Price Hike Not Going Over Well, Analysts Say

When SAP announced a new software maintenance program carrying higher fees, many expected other vendors to follow suit; but for the most part, that hasn't happened.

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Posted on Feb 01, 2009

Just over six months ago, when SAP AG announced a new Enterprise Support software maintenance program carrying higher support fees for most of its customers, many observers expected other enterprise software vendors to follow suit and increase their own maintenance prices under the cover of SAP's move.

The good news for manufacturers trying to keep a lid on software costs during the recession is that, for the most part, that hasn't happened. Influenced by a surprisingly strong backlash among SAP customers reacting to the maintenance price increase and by the economic downturn, even software vendors that had considered following SAP's lead have decided not to.

"We've had private discussions with vendors about how they could increase maintenance prices now in the 18% range, but, given all of the noise about SAP's move and pain being inflicted by the recession, nobody's going to do that right now," says Jim Shepherd, research senior vice president at AMR Research.

Grumbling from SAP customers about the maintenance price increase has been substantial, say analysts and others in a position to hear it. Last July, SAP rolled out what it called Enterprise Support, effectively raising annual maintenance rates paid by most customers from 17% of a net license charge to 22%. The increase, which began to go into effect last month, will be rolled out gradually, taking full effect in 2012.

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