April 29, 2009

Victory for SAP user groups as Enterprise Support price rise is delayed

Significant agreement highlights the importance of users campaigning together

By Peter Sayer, IDG News Service

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SAP has bowed to pressure from user groups, and will slow the rate at which it applies new software support charges.

At the same time the software giant has agreed a series of key performance indicators (KPIs) with the user groups to measure the value for money offered by the Enterprise Support program.

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 percent of software license fees, compared to 17 percent for the existing service. That's an increase in support costs of almost 30 percent.

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 percent each year, rather than 8 percent, 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), which coordinates many of the world's largest national SAP user groups.

An independent auditor will validate the results, SAP said. The results of that benchmarking program will be keenly watched, as SAP has also agreed to delay future increases in the price of Enterprise Support until targets for customer satisfaction are met. SAP expects to meet those targets within four years, it said.

The deal isn't perfect, according to the Francophone SAP Users' Club (USF), one of the groups with which SAP negotiated.

However, USF is satisfied with the price compromise, which it said resulted from a marked change in SAP's position under pressure from SUGEN members.

The consensus on KPIs for the quality of service offered by SAP's Enterprise Support shows a real willingness on SAP's part to play the game in a field where no other software vendor has ventured, USF said.

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