What some speculated would be a big blow to SAP this week turned into a big win, as the enterprise apps leader signed a large maintenance renewal contract with fellow German company Siemens AG.
Various reports over the past month indicated that Siemens, a major global SAP customer, would jettison its maintenance contract and seek SAP application support from a third party. Wednesday’s revelation ended that conjecture, with SAP announcing in a statement the “completion of Siemens’ contract renewal for SAP maintenance support services for all SAP solutions based on SAP’s maintenance standards for large customers for a duration of three years.”
SAP also expanded its software footprint, as Siemens agreed to add to its Business Suite deployment SAP’s Supplier Relationship Management offering, which automates processes along the procure-to-pay chain for indirect material.
“Coupling its maintenance support renewal with selection of our SRM solution is a clear indication that Siemens trusts in the ability of SAP to provide global services for its enterprises,” said Erwin Gunst, SAP’s chief operating officer. “SAP has been, and will continue to be, a strong strategic supplier to Siemens.” (The Wall Street Journal reported Tuesday that Gunst is on medical leave, with no word on when he may return to his duties.)
The maintenance renewal contract is also an expansion, since Siemens signed up for the MaxAttention service, which “provides onsite intensive customized support services,” according to SAP.
When questioned about whether Siemens received any discounts or other considerations as part of the deal, an SAP spokesman today said the company would not reveal specific pricing terms, but that the Siemens contract was "[in] line with our usual costs."
The issue of maintenance value has received plenty of attention over the past 18 months. The Siemens episode is perhaps the most high-profile test for SAP’s maintenance offerings since the company, under pressure from customers, rolled out a plan in June that holds SAP liable for meeting certain benchmarks for maintenance deliverables and also delays a schedule of fee increases.
SAP and its fellow providers of traditional, on-premise software find their maintenance revenue streams under threat from multiple fronts, as third-party providers, including Rimini Street and big services companies such as IBM, ply discounted maintenance services and SaaS vendors reinvent the software deployment model by rolling maintenance costs into monthly subscriptions fees.