News Analysis: DSAG Project Team Members Resign Leadership of SUGEN KPI Working Group

DSAG project team and project leader departure could signal disagreement with methodology not SUGEN
SAP embarked on an ambitious program to prove value in its Enterprise Support fee hike last year.   As planned, SAP should announce the results for the first set of SUGEN KPI's in early December.  However, two key SUGEN KPI project sponsors (revised 11/30/2009) team members have left from the German SAP user group (DSAG).  Confirmed by a spokeswoman to IDG News Service on November 27th, 2009, both project leader Andreas Oczko and project sponsor Otto Schell resigned from their roles on November 18th.  Several outcomes may potentially have led to this departure:

  1. The methodology used by the auditing firm (Gartner Consulting) could be quite inconsistent
  2. Teams may not have had enough time to review the data to check for statistical errors.
  3. The KPI's measured were only the first set, not the complete set.
  4. A few months does not provide enough trending data
  5. SAP's attempting to announce results prior to when 90%+ of its maintenance renewal occurs in Q4

To be clear, DSAG remains a SUGEN member and has not pulled out of the group or project.  The leadership members have just left the project and have been active with the SUGEN group on other projects and issues.
SAP Should Still Be Given Credit For Undertaking A Huge Endeavor
Despite attempting to raise get away with a large (revised 11/30/2009) maintenance fees hike in the middle of one of the worst global recessions, the SUGEN agreement with SAP is a good faith gesture and a step in the right direction.  While this is not a legally binding agreement, the deal calls for SAP to limit increases until demonstrable results from the KPI's have been achieved.  This is not an easy challenge but a few props should go out to SAP because:

  1. SAP's embarking on a risky but unique program to show value
  2. Benchmarking 100 global customers against 10/11 KPI's creates data consistency challenges
  3. Agreeing to present results in the face of public opinion takes courage

The Bottom Line For Users -  Remain Vigilant And Compare SUGEN Results With Your Own

SAP customers should work with their user groups to understand the methodology used and gain access to the underlying data with these 100 customers.  Keep in mind SAP's Value Academy already has benchmarking data for a broader set of customers.  The result - selection of the 100 customers by the user groups will significantly impact the outcome.  Users should see how their situation fares compared to the benchmarks to gauge their own potential value achieved from SAP's Enterprise Support
The Bottom Line For Vendors - Provide Customers With Tiered Maintenance Plans
Pressures from SaaS deployments and mid-market competitors will erode the 70 to 80% margins in maintenance fees.  Customers will begin to demand third party maintenance options and include such protections in future contracts.  Those vendors who keep tiered maintenance based on the life of the product in production will engender the most loyalty by providing customers with the right balance between sustaining maintenance and incentives to upgrade.  At the end of the day, customers have to migrate on their own terms.  Maintenance fees should reflect the value that customers receive and not be an impediment in the client - vendor relationship.
Your POV.
If you get a chance, let us know:

  • Which SAP products do you use?
  • What do you think about the progress on SUGEN KPI's?
  • Are you considering alternatives to SAP?
  • Do you feel SAP is innovating fast, ok, or slow enough?

Feel free to post your comments here or send me an email at rwang0 at gmail dot com or r at softwareinsider dot org.
Copyright © 2009 R Wang and Insider Associates, LLC. All rights reserved.