SAP has rejected UK User Group complaints that its new pricing structure for maintenance contracts is unfair on enterprises.
The UK & Ireland SAP Users Group issued a statement that slammed the 29.4 per cent price hike that “is proving to be a particularly difficult area to accept,” said Alan Bowling, the group chairman.
“The mandatory nature of this change along with the increase in cost has received hugely negative feedback from our membership to date,” said Bowling.
“Many of our members may not want or need this extra level of support.”
The pricing changes mean an increase from 17 per cent of contract value to 22 per cent of contract value, which will be immediately applicable to new customers and introduced in a phased way for existing customers. In real terms this is a 29.4 per cent increase in the support element of the contracts over the next four years, said the user group.
But SAP spokesperson Bill Wohl denied allegations the enforced changes are an attempt to bolster SAP’s revenues.
“I can state emphatically that no component of this decision is about improving SAP revenues in reaction to industry market slowdown. This is purely a reaction to changing customer needs.”
Wohl acknowledged Bowling’s comments. “We take the feedback from the UK quite seriously. Not every customer wants to pay more. We also know that in general, most customers understand the added value that can help them drive down operational costs.”
According to Wohl, most base line support offerings from most major vendors that originated in the late 1990s and early 2000s does not meet the requirements that customers demand today. This includes SAP’s Standard Support, which is a factor in SAP’s decision to end the product, and migrate its customers to Enterprise Support. Most customers, he added, have welcomed the change.
“We’ve seen dramatic changes and increased complexity in how enterprises manage their IT environments, such as the move to service oriented architecture (SOA). Customers want those solutions supported and they want their primary software provider – in this case SAP – to support those solutions,” he said.
While it may cost more, Wohl claimed the support package will lead to operational returns and greater efficiencies for customers.
“Customers want an end to end support solution so when they have a problem, they can turn to one place to get that support.”
Smaller outfits that feel they don’t need the higher level of support, will grow into the new offering. “Smaller companies have more concerns of operational costs and watch every penny. These small and mid-sized companies don’t remain static. Their solution roadmaps are moving to increasing complexity in their IT landscape.”
Some of SAP’s largest customers will be exempt from the support cost changes, Wohl disclosed. “There is a small group of customers that will have an exception. These are most of our very largest customers that are already spending significant amount of money this year on support. Most of them are on the upgraded solution. It’s a small percentage of our customers,” he said. “There are no other exceptions to the program.”