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.
"The grumbling has been more passionate in some parts of the world than others," says Rod Masney, immediate past chairman of the Americas' SAP Users' Group (ASUG) and global director for IT infrastructure services at Owens-Illinois. "Nobody likes to take an increase, and some customers have been more vocal about it than others."
While customers across SAP's customer base have objected to the increase, users in Europe have been the most vocal, Masney says. In fact, customers in Germany and Austria won a one-year reprieve from the increases after pointing out that local laws limit changes that can be made unilaterally to existing contracts.
As much as anything, Masney says, customers objected to the manner in which SAP communicated the price hike. In justifying the move, for example, SAP executives said some customers had requested the new program, which, in addition to raising prices, enhances maintenance services. SAP also justified the move by noting that the increase brought its fees to parity with the 22% maintenance price rate charged by its number one competitor, Oracle.
"SAP had some work to do in articulating the value proposition behind the change," Masney says, noting that the Enterprise Support program includes new features such as a 24/7 support adviser service and a new version of SAP's Solution Manager software that makes it easier for customers to track down and fix software problems.
"SAP didn't adequately explain what customers were going to get out of the change," AMR's Shepherd says.
Given such concerns, it's not surprising that other enterprise software vendors have resisted increasing their own maintenance prices. Soon after SAP announced its new maintenance pricing program, Jim Schaper, president and CEO at applications vendor Infor, told Managing Automation that he had considered and rejected a similar increase.