April 02, 2009

Udate: SAP users get tough about Enterprise Support KPIs

Why are German enterprises allowed to avoid price rise, user group asks?

By Peter Sayer , IDG News Service

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SAP and its customers disagree not just about the value of its Enterprise Support service, but also about how to measure that value - and now, it seems, about how close they are to agreeing on how to measure that value.

The key performance indicators (KPIs) by which SAP will measure the value of its Enterprise Support service are far from ready, the head of the French SAP user group said Thursday.

SAP said Wednesday it is waiting for a response from the SAP User Group Executive Network in order to finalize the KPIs, and will release them soon.

"That doesn't reflect my perception of the matter," said Jean Leroux, president of the Club for French-speaking SAP Users (USF) and one of the members of SUGEN, which brings together the heads of SAP user groups around the world.

Discussions about the KPIs are a truly collaborative process, he said. "It's not about who is waiting for whom; it's more complex than that."

Forrester analyst Ray Wang said, “Finding the KPI’s that the user groups can agree on will be the first step to (SAP) regaining credibility among users. This is very important to SAP customers.

“From conversations with over 800 SAP clients, if they had a preference, they would want to keep a two-tier model of support or at least have the option of paying for just tax and regulatory support packages for those who do not want to upgrade.”

Wang also said that any failure to reach agreement on the KPIs could put the company and user groups on a potential collision course.

Last November SAP said it would phase in its planned Enterprise Support price rises and add two more years to standard support, while it met with the global federation of user groups to establish KPIs. It pledged to hold back on the second phase of the price increases while agreement was reached.

In recent days negotiations over the KPIs have picked up speed. User group leaders received a letter from SAP co-CEO Léo Apotheker on Wednesday, and later Thursday Leroux will take part in a conference call between around 20 SUGEN members and a representative of SAP, he said, declining to provide further details of the letter or the conference call.

An SAP spokesman said Stefan Kneis, who leads the company's communications with user groups, will participate in the conference call to discuss KPIs for Enterprise Support.

Leroux is more cautious than SAP about the readiness of the KPIs and the state of the negotiations, which are "very delicate," he said.

"It's difficult to implement. We may not have a model that works this year," he said.

SAP will use the KPIs to justify an across-the-board increase in the cost of its support contracts, from 17 percent of license value to 22 percent. The switch to the new Enterprise Support service, introduced last May, represents a price rise of almost 30 percent.

The situation today is unfair, Leroux said, as SAP ultimately allowed around 80 percent of German and Austrian customers to keep the standard support contract at the 17 percent rate, while in other countries SAP is forcing all customers to switch to the more expensive Enterprise Support.

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