Following on from yesterday's announcement of a hike in SAP maintenance charges, the German title Computerwoche implies that the powerful 'Mittelstand' group in the German SAP user group are far from happy. Under the title: "Higher maintenance costs upset SAP customers ," Computerwoche interviewed Gunther Rheinhart, executive member of the 'Mittlestand' DSUG group and IT manager with AMI DODUCO, a manufacturer of metal contacts.
Mittelstand is a German expression for the mid-range of customers which SAP says forms the bulk of their customer numbers. It is understood that this is regarded as a powerful grouping in Germany whose concerns SAP cannot ignore.
Rheinhart argued that large customers have a different negotiating position than his group and that they see little benefit from the new Enteprise support system. Under the revamped system, SAP is saying that customers will get a better deal in respect of on-ramping functionality. Rheinhart believes this is not necessarily appropriate for the mid-range. He says that in any one year, his company might send 40 to 50 online support messages to SAP which fall within current arrangements. He sees no need for additional support which is being offered under the new deal. "The monitoring-services, which SAP now introduces, are not required for our environment." (translated)
Rheinhart feels that SAP is introducing the new system too quickly and that it will create special problems for those customers who have outsourcing arrangements that run over longer time periods. "We have a five-year contract with this company. It is difficult for me to explain to them, that SAP now takes over parts of the maintenance on the basis of this new support model." (translated)
Rheinhart is setting up a workshop with SAP and another customer to discuss the new arrangements. They don't believe they can prevent SAP from introducing the new charges but they are hoping to wring some concessions out of the company. The group has already been successful in getting SAP to agree to an incremental increase in maintenance fees.
I spoke with one customer who preferred to remain anonymous:"The title of the article says it all. SAP has a lot of unhappy customers right now."
Ray Wang, analyst at Forrester weighed in on the topic. While giving SAP credit for holding support at 17% for more than a decade, a figure third party suppliers scoff at, he said:
Now is the time that customers should leverage their independent users groups to organize a campaign against this maintenance fee increase. Groups such as ASUG, DSAG, SAP Users Group UK & Ireland need to step up to the plate and find a solution to this increase. This will be the real test of these users groups effectiveness. It will become painfully obvious which individuals in leadership positions have been under the influence of SAP and which individuals will be willing to back the end users.
We already know the answer to that in the Americas from the response by Mike O'Dell, American SAP User Group chairperson: "As customers embark upon the SAP Enterprise Support transition, we at ASUG are eager to play a prominent role in educating our members about the SAP Enterprise Support program and the potential impact it can have on the business."
I’ve spoken to a number of clients recently that have said…I outsource payroll…I outsource benefits…I am only using a small piece of PeopleSoft. What do I do? The answer, which often they don’t like to hear, is turn off PeopleSoft, save yourself a shed-load of money and pain, and look to a SaaS talent management system to store all of your employee data that will drive more value, savings, engagement, etc. Too many customers walk around with the ORCL/SAP vice-grip, complaining it really hurts instead of addressing the issue.
Vinnie Mirchandani, another Irregular and contract negotiator said:
The ripple effect of maintenance is being felt in a number of ways. Buyers negotiate harder for initial license discounts since maintenance is tied to that, they are looking at SaaS, third party maintenance options, they are limiting inflation increases etc etc. At least three of my clients who used to routinely write annual maintenance checks, now ask the vendor to document how many of their help desk calls they serviced in previous year, how many relevant bug fixes they delivered etc - I justify value for money. Still others are looking to vendor own economics - how much have they offshore, automated in support etc and using that in annual reviews. The auto-renew is not that common any more.
In the early-1990's I was part of the user group for a specialist supplier faced with a similar situation A number of us took the decision to come off maintenance altogether and self support. We figured the systems would last us at least another 5 years before we would require re-implementation at which stage we could re-evaluate. Today's business systems are far more complex and considering a rip and replace is not something that companies can readily contemplate.
The bottom line is that there are alternatives. Customers don't have to take what they're told and simply fork over the equivalent of double the license fee every ten years.
Caveat: The translations were received via a reliable source but they are not official translations. They may therefore be slightly inaccurate but do carry the sense of what was said.