NET(net), Inc.

SAP Gives Pause on Support Increase by mpwelsh
May 15, 2009, 5:10 pm
Filed under: SAP, Software | Tags:
Don't Be Surprised

Don't Be Surprised

In advance of its annual Sapphire meeting SAP has bowed to the torrent of negative press and customer feedback on its mandatory shifting of support to Enterprise with an effective rate of 22% of net license value, which represents a 29.4% increase in support costs for SAP.  As SAP customers undoubtedly know, the effect of the shift to Enterprise support is that the percentage of net license moves to 22% from 17%.  While the target of the 29.4% increase continues to be 22%, the trajectory will be more in line with traditional annual increases.  SAP has provided a revised progression towards the 22% target. Originally, the increase was to be carried out over 4 years, starting with an 8% increase in 2009 and increasing a further 8% per year until 2012 when it would increase by 2.5%. Under the revised timeline, the annual increases will be scaled back to 3.1% per year until the 22% level is reached. In addition to the timeline, again responding to pressure from the various SAP user groups, the improved services that SAP is advertising under the Enterprise model will be audited by an independent party to assess the value customer received.

Despite the movement on timeline, SAP remains silent on whether the pace of increase will abate once 22% is reached.  As SAP continues down a path of fewer customer options for support, and a mandated support level at the 22% level, it’s hard to argue that the slant aligns more with Oracle’s policies than it does with the interests of SAP customers, and it is not unthinkable that price increases could continue in perpetuity.  Check out NET(net)’s May newsletter for more on the “5 Things SAP Isn’t Advertising on Enterprise Support”.


1 Comment so far
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If Siemens can take the plunge to take support and maintenance away and work with Rimini Street, it will be interesting to see how other organisation consider this option and follow in the same vain. It seems time for the customer to hit back and say NO to these expensive fees. Clients also need to spend more time reviewing their software agreements and contracts to ensure that they meet the ‘current’ day requirements of the business, rather than the requirements they thought they had when they signed up 3 or 4 years ago. I like the work your organisation does and will follow your blog and see who you help save money and costs next.

Comment by Marc Conway

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