SAP makes progress with KPIs, postpones cost increase

SAP seems to be making progress with the KPIs that underpin the maintenance price increase. But it is postponing the imposition of a price increase. This begs many questions which remain unanswered.
Written by Dennis Howlett, Contributor

In a statement released from Walldorf this morning, SAP said:

"...the 2009 KPI achievements of the SUGEN SAP Enterprise Support program have shown clear value to participating SAP customers. SAP and the SAP User Group Executive Network (SUGEN), a global federation of 12 key SAP user groups, want to thank all customers that actively took part in this innovative program launched in April 2009.

Through the collaboration with these customers, the program has made significant progress in a short time frame. Building on these positive results, SAP has formed a task force to reach out to customers and user groups to continue and enhance the ongoing dialogue and incorporate their feedback in order to maximize customer value from SAP’s entire support offerings. SAP plans to provide the outcomes of the task force the beginning of 2010. Until then, a decision on pricing for Enterprise Support has therefore been postponed. With this, SAP once again demonstrates that it takes the concerns of its customers seriously and also recognizes the ongoing pressures bearing down on IT budgets in the current economic environment."

[My emphasis added]

There's a lot in here to digest and parse and it is not entirely clear whether SAP is signaling that it has met the KPIs which underpin the planned maintenance price increase or not. A first reading would suggest that SAP is confident it will meet this first milestone which is subject to audit by Gartner Consulting. Critically however, it is being cautious. The statement that it is postponing any price increase could be for any number of reasons.

Observers might note that at the end of last week, IDG reported that:

... project leader Andreas Oczko and project sponsor Otto Schell both resigned [from the project] on Nov. 18, a spokeswoman for DSAG said Friday.

Of itself this might mean nothing because the report went on to say:

Despite their resignations, Oczko, the DSAG board member responsible for operation, service and support, and Schell, a DSAG board member and also vice chairperson of SUGEN, will remain involved in the project, said the DSAG spokeswoman, Angelika Jung.

As I said to an investment banking inquirer this morning - the situation is best described as 'fluid.' Last week while in Manchester at the UK&I UG, it was clear to me that customers are less concerned about the maintenance issue than last year but then there were plenty of customers eager to find value in SAP offerings as part of their maintenance payment.

You can argue the communications issue both ways saying SAP has done a poor job of articulating value. On the other hand, customers have not always appreciated what SAP might deliver. However I think the telling point in this press release is the last sentence:

[SAP]...recognizes the ongoing pressures bearing down on IT budgets in the current economic environment

That looks like an admission that SAP anticipates difficulty making the price increase stick among the whole user base, regardless of what the KPIs say. That may provide customers with a short term breathing space. If my assumption is correct then SAP needs to make a clear statement about what it intends to do next. Stakeholders on all sides are anxious to know.

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