News Analysis: SAP Revives Two-Tier Maintenance Options

Standard Support Returns After Much Deliberation
SAP announced today that they would be reintroducing their Standard Support offering.  Customers now gain choice with a 2-tier maintenance offering. Here are the details between standard support and enterprise support.

  • Standard Support Offering reintroduces at 18%. Customers seeking core bug fixes, support packages, risk mitigation, and related new functionality will have choice in staying on standard support.  The program is designed for customers who seek to keep their systems up and running.  Customers with CPI clauses in their contracts will want to take note - the first set of consumer price index (CPI) price increases will begin January 1st, 2012.
  • Enterprise Support remains at 22%. SAP will continue to offer Enterprise Support at 22% for new customers and a ramp up for existing customers (see Figure 1).  Enterprise support includes features such as best practices for IT operations, proactive monitoring and reporting, and transparency for business process performance.  Customers who choose to go with Enterprise Support prior to March 15th, 2010 will be eligible for ramp up.
  • Supplemental offerings still available. Other programs such as Max Attention, Safeguarding, and Product Support for Large Enterprises (PSLE) will continue to be available by choice and invitation.

Figure 1. SAP's New Support Pricing Scale
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The Bottom Line - Best Support Scenarios Will Depend On Your Previous and Current Contracting Prowess
The good news - SAP's spent considerable amount of time listening to their customers.  The result - customers do want choice and there are plenty of choices to be made.  Decisions on which option is best can be best summarized by asking a few key questions:

  • Are you expanding your use of SAP in the next 3 to 5 years? Determine your pace of adoption for SAP products.  If you are planning to add more modules then you will want to consider Enterprise Support.  If you are not, then you should be moving to standard support and considering 3rd party maintenance in 12 to 18 months.
  • Do you have a CPI increase in your contract? If you do, then you'll want to see if the total is above the inflation rate or the enterprise support ramp up of 6% per annum.  The best case is to have negotiated CPI + 0% but most SAP customers have CPI +5% as standard, well over the 6%.
  • What's your overall SAP apps strategy? How will you harness innovation within and around SAP?  What's your plan in the next 12 to 18 months?  What will you be doing with SaaS?  How will you be incorporating portals such as Sharepoint?
  • Can you make a decision on Enterprise Support by March 15, 2010? Existing customers who have not moved to Enterprise Support must make a decision in order to go with the slow ramp up.  Those who wait after March 15, 2010 will start at 22% maintenance.

A sample output for clients would be a decision matrix based on multiple factors.  Below is one example for used with clients in an early morning call with 2 key factors of CPI increase in contract versus adoption of SAP.  Other factors will include when your contracts began and what lifecycle of adoption your organization are in. (See Figure 2):
Figure 2.  Sample SAP Support Decision Matrix

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Your POV
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Other Useful Software Contract Negotiations Links
Tuesday's Tips: Five Simple Steps To Reduce Your Software Maintenance Costs
Tuesday's Tip: Do Not Bundle Your Support and Maintenance Contracts!
Tuesday's Tip: Software Licensing and Pricing - Do Not Give Away Your Third Party Maintenance And Access Rights
Tuesday's Tip: 3 Approaches To Return Shelfware
Tuesday's Tip: Software Licensing and Pricing - Now's The Time To Remove "Gag Rule" Clauses In Your Software Contracts

Related Blogs, Press, and Links
MUST READ - 2010017 Irregular Enterprise - Dennis Howlett "SAP's Maintenance Cost Sleight of Hand"

News Analysis: SAP Moves All Customers Onto More Expensive Enterprise Support
News Analysis: SAP and SUGEN Make Progress on Enterprise Support
20100115 - Courtney Bjorlin " Choosing Standard or Enterprise support more difficult for SAP customers with no KPIs "

20100114 IDC - Amy Konary at IDC "Guest Post: Back by Popular Demand, A Basic Maintenance Offering from SAP"
20100114 Forrester Blogs - Paul Hamerman "SAP's Tiered Support Announcement Diffuses a Contentious Issue"
20100114 IDG News - Chris Kanaracus "SAP shakes up support structure, executive organization"
20100114 Enterprise System Spectator - Frank Scavo "Flash: SAP backs down on 22% maintenance fees"
20100114 Information Week - Doug Henschen "SAP Reintroduces Tiered Maintenance"
20100114 ComputerWorldUK - Mike Simons "Update: SAP does U-turn on Enterprise Support"

Copyright © 2010 R Wang and Insider Associates, LLC. All rights reserved.