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Recession forces vendors down to user level

Troubled companies are ripe for negotiation

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The global recession took a major toll on enterprise software vendors and their customers in 2009, leading to flagging license sales and tight IT budgets. But the economy also prompted a series of policy changes and concessions from vendors that could make users' lives easier in the long run, especially if they become broader trends.

Here are some highlights:


SAP's KPI agreement with SAP user groups

In April, SAP announced plans to work with user group executives on a set of KPIs (key performance indicators) meant to prove the value of the vendor's Enterprise Support service. The move followed months of protest from customers over the new service, which offers more features but carries a significant price increase.

Much work remains to be done on the project, which is in somewhat of a regrouping phase following the resignation of its leader, German-speaking SAP Users Group (DSAG) board member Andreas Oczko and sponsor Otto Schell, also a DSAG member and vice chairman of SUGEN.

Oczko and Schell were unconvinced an initial set of KPI results were concrete enough to prove Enterprise Support will bring new benefits to SAP's entire customer base, versus the companies taking part in the benchmarking project.

Still, the KPI agreement appears to be unprecedented. And while SAP would no doubt have preferred users accepted the price rise quietly, its public commitment to validate Enterprise Support with hard numbers could set a new standard for every vendor's maintenance strategy, and more importantly, users' expectations.

Epicor launches program to hold down implementation costs

A significant chunk of the total cost of an ERP (enterprise resource planning) application lies in the implementation, and ERP projects are notorious for running over time and budget. That uncertainty is responsible for its share of ulcers among IT executives.

Epicor wants to change that through a program it announced in November called "Shared Benefits." As with any ERP project, Epicor and a customer will map out the project's scope and goals. But there's a twist: If the project comes in under budget, any funds leftover will be split 50-50. The same approach applies when a project goes over budget, as customers will cover half the cost of any additional consulting hours.

This system gives customers some of the peace of mind provided by a fixed-price contract, along with a chance to get money back. And Epicor says it has no good reason to drag the project out, given that it has to foot half the bill for overruns.

If the program turns out to work well for both Epicor and customers, expect to see other ERP vendors follow suit in 2010 with similar offers.

Infor pushes 'Flex' upgrade program

Like Oracle, ERP vendor Infor has grown through a long string of acquisitions. This has left the company with a sprawling portfolio of applications, with many customers running older application versions.

In June, Infor introduced its "Flex" program, which lets customers upgrade to the newest version for "minimal or zero" licence fees, no differences in maintenance costs, attractive pricing for additional features, and rapid implementation services. Users can also switch to another application in Infor's library, but will incur a small transaction fee.

There's something in this for Infor, of course. The more customers upgrade to newer applications, the quicker Infor can retire the old ones.

Also, the plan is a one way street, as blogger Vinnie Mirchandani noted at the time. "There is no downgrade path. If customers only want a low touch plan, some bug fixes, minimal number of support calls, regulatory updates, you have to keep paying at full rates."

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