Things are not getting any easier for SAP following the across the board maintenance price hike announced July 16th. Earlier today I spoke with Alan Bowling, chairman of the UK and Ireland SAP User Group on the topic. In an official announcement last Friday, Bowling said: "The mandatory nature of this change along with the increase in cost has received hugely negative feedback from our membership to date. In real terms this is a 29.4% increase in costs over the next four years for existing SAP customers, and is proving to be a particularly difficult area to accept. As I have stated before the Enterprise Support product looks good and for organisations needing the extra level of support that it offers it will no doubt provide value."
During our conversation, Bowling expanded on his comments which he estimates affects some 900 British and Irish customers: "It's a good deal for new customers implementing ECC6 (the latest SAP Business Suite iteration). ECC6 is a big hurdle, it is way harder than R/3 and a fair amount of support is required." I questioned whether there are that many customers moving to ECC6 from R/3 as there is comparatively little available case material. "It is happening and it is worthwhile where there is a need for what I call 'governed' SOA (SAP terms this Enterprise SOA.) With ECC6 you have assurance that as you move to SOA, all your GRC stuff is going to be OK. That is valuable. But, I stress that's not everyone," said Bowling. "If you're a seasoned SAP customer, especially if you've built up SAP competencies then it is hard to see the value. The message we want to get across is that the current one size fits all approach doesn't work. We want to see business cases where the value is demonstrated. The difficulty comes in recognizing the differences in demand." This is similar to the position taken by the German SUG.
I asked whether SAP can arbitrarily impose the price hike: "That's an interesting debate. Some customers have fixed price maintenance contracts while others have 'no' increase' clauses." As is usual in these types of contract, every case is slightly different but I anticipate there will be much discussion about SAP's legal ability to impose the increase.
Meanwhile, the French SUG is taking a similar position, saying they are very skeptical the plan will deliver. They are deminding that SAP puts a formal recruitment process in place so that quality assessed engineers are an integral part of the new Enterprise Support program.
The user message that is emerging can be summarized as follows:
- SAP's communications have lacked clarity.
- What was once thought to be a new customer only issue will likely impact all SAP customers with the exception of those with a cut off of €30 million in discounted license fees plus BusinessOne customers and those with specially noegotiated terms.
- The one size fits all argument is not accepted as appropriate.
- There will be a significant amount of negotiation around individual contracts.
- Business value has yet to be demonstrated as a justification for the price hike.
Interestingly, Bowling doubted whether third party providers like RiminiStreet could take up the slack: "I'm not sure it has been shown that these providers have the skills to support the newer solutions," he said.