SAP delays enterprise support price hike

SAP has ceded to pressure from user groups, agreeing to slow the rate at which it applies a new tariff for software support. At the same time, SAP announced a series of key performance indicators (KPIs) agreed upon with the user groups to measure the value for money offered by the Enterprise Support program.

Last year, SAP CFO, Werner Brandt, was grilled by SAP users over the company’s decision to ratchet support costs up to 22 per cent by 2012.

The final price for customers migrated from SAP’s old support program to the new Enterprise Support service will now remain the same through 2015, at 22 per cent of software license fees, compared to 17 per cent for the existing service. That’s an increase in support costs of almost 30 per cent.

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However, instead of applying the increase in four annual steps, SAP has now agreed to extend that to seven, a pattern which better fits with the company’s seven-year maintenance lifecycle, the company said on Wednesday.

That means the cost of support will rise by an average of 3.1 per cent each year, rather than 8 per cent, with the final price increase now taking effect in 2015, not 2012. Reducing the annual rate of increase in software support costs was one of the user groups’ key demands.

The KPIs answer another of their demands: finding a common way for SAP and users to measure the value of Enterprise Support. When it introduced the service, SAP claimed that the increased price was justified by the improved services it offered over existing maintenance contracts.

The indicators cover four main categories: business continuity, business process improvement, protection of investment and total cost of operations.

They will be used in a joint benchmarking program that will track the satisfaction of a representative selection of SAP customers, chosen by SAP and members of the SAP User Group Executive Network (SUGEN), a talking shop for the heads of many of the world’s largest national SAP user groups. An independent auditor will validate the results, SAP said.

Last year, the head of the Americas SAP Users Group, Steve Strout, left his post amidst speculation of whether he left voluntarily or was fired. Strout was on the frontlines of SAP’s controversial decision to move customers to a more expensive service.

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Jim Love, Chief Content Officer, IT World Canada

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