When SAP lifts the curtains next month on its Sapphire customer conference in Orlando, you can expect that the cost of enterprise software maintenance will be a topic much on customers’ minds. Ever since SAP announced last July its plans to gradually raise maintenance prices from 17% of net software licenses fees to 22%, there’s been an ongoing chorus of complaints, much to SAP’s disappointment. The complaints boil down to this: What value will we get for this higher-priced product?
So far, SAP has offered several answers to this question:
- * Customers are getting a new tool and new methodologies (Solution Manager and RUN SAP).
- * SAP hasn’t raised maintenance prices in several years, and now it’s just bringing its pricing in line with competitors, specifically Oracle.
- * SAP deployments these days tend to be more global and complex, requiring more support from the vendor.
SAP certainly has good arguments on the first two points. On the third point, however, what if customers could demonstrate that, by virtue of their own internal support processes and their use of SAP-provided tools such as Solution Manager, they would be less likely to consume loads of SAP support resources? Shouldn’t such customers be entitled to a break on maintenance? Maybe an exemption from the impending price increases?
The idea, which has been kicking around the blogosphere in recent weeks, makes a certain amount of sense. Let’s say a vendor such as SAP were able to easily certify that a customer had put in place a support center of excellence that supported best practices and could preempt or respond directly to a certain percentage of first-line support calls? By rewarding that work with a discount on maintenance, the vendor would help its customer lower its total cost of software ownership, potentially making more cash available for software purchases.
At the same time, the vendor would be demonstrating its own domain expertise by evaluating and even guiding customers’ improved support processes. Customers might even be willing to pay for this expertise on a one-time basis. Aren’t enterprise software vendors always bragging about their deep process expertise? Here’s a chance to prove it and drive down customers’ TCO at the same time.
One downside to this type of arrangement is that the vendor would have to come up with — and pay for — a methodology for evaluating customers’ support processes, one that wouldn’t generate even more complaints or even lawsuits.
Still, the first enterprise software vendor who comes up with a way to make such an approach fly could claim a significant competitive advantage, particularly in a very cost-sensitive market.
—Jeff Moad, MA Executive Editor
Need help in this rapidly changing economy? Progressive Manufacturing Summit 2009: Redefining the Business of Manufacturing in Turbulent Economic Times is an invitation-only event for senior-level manufacturing executives, providing you with the opportunity to gain insight and expand your knowledge, network with your peers, and walk away with a tangible action plan to address the toughest economic environment we have seen in years. Register Now.
A Way to Lower Software Maintenance Costs
When SAP lifts the curtains next month on its Sapphire customer conference in Orlando, you can expect that the cost of enterprise software maintenance will be a topic much on customers’ minds. Ever since SAP announced last July its plans to gradually raise maintenance prices from 17% of net software licenses fees to 22%, there’s been an ongoing chorus of complaints, much to SAP’s disappointment. The complaints boil down to this: What value will we get for this higher-priced product?
So far, SAP has offered several answers to this question:
SAP certainly has good arguments on the first two points. On the third point, however, what if customers could demonstrate that, by virtue of their own internal support processes and their use of SAP-provided tools such as Solution Manager, they would be less likely to consume loads of SAP support resources? Shouldn’t such customers be entitled to a break on maintenance? Maybe an exemption from the impending price increases?
The idea, which has been kicking around the blogosphere in recent weeks, makes a certain amount of sense. Let’s say a vendor such as SAP were able to easily certify that a customer had put in place a support center of excellence that supported best practices and could preempt or respond directly to a certain percentage of first-line support calls? By rewarding that work with a discount on maintenance, the vendor would help its customer lower its total cost of software ownership, potentially making more cash available for software purchases.
At the same time, the vendor would be demonstrating its own domain expertise by evaluating and even guiding customers’ improved support processes. Customers might even be willing to pay for this expertise on a one-time basis. Aren’t enterprise software vendors always bragging about their deep process expertise? Here’s a chance to prove it and drive down customers’ TCO at the same time.
One downside to this type of arrangement is that the vendor would have to come up with — and pay for — a methodology for evaluating customers’ support processes, one that wouldn’t generate even more complaints or even lawsuits.
Still, the first enterprise software vendor who comes up with a way to make such an approach fly could claim a significant competitive advantage, particularly in a very cost-sensitive market.
—Jeff Moad, MA Executive Editor
Need help in this rapidly changing economy? Progressive Manufacturing Summit 2009: Redefining the Business of Manufacturing in Turbulent Economic Times is an invitation-only event for senior-level manufacturing executives, providing you with the opportunity to gain insight and expand your knowledge, network with your peers, and walk away with a tangible action plan to address the toughest economic environment we have seen in years. Register Now.