I was talking recently to an airline executive and he was fretting at the unused airline mile liability that hangs over the industry. By some accounts almost 20 trillion air miles have been issued but not used. Or better put - not allowed to be used. As I have written before they have grossly devalued that currency and destroyed the loyalty they had earned with their elite and other frequent flyers.
SAP should learn from the airline example. Its BusinessbyDesign, previously A1S, announced today is SAP's nth attempt at the middle market. But what is different and very promising is the economics it promises - at $ 149 a user a month is a fraction of cost of on-premise implementations. Not SAP being generous - just responding to benchmarks other SaaS vendors have set.
But what about its larger customers? Don't they deserve a similar break? Will SAP lower maintenance? Will it aggressively monitor its systems integrator costs? As I wrote earlier this week and several times in the last couple of years, SAP TCO is a mountain which casts a shadow on so many IT budgets - as large as the airline unextinguished mileage liability.
The airline executive had a sense of remorse when he said between all the mileage being given out around credit cards and newer affinity programs, folks who never even pay for a flight can now fight for the same free seats as heavy travelers like me.
SAP's loyal, larger customers which made the company have a right to feel the same way as SAP chases after new markets while not offering them the same breakthrough in economics.
My thoughts exactly. What happens when large customers (>10,000 ees)say "...screw the upgrade" I want to start over with ByDesign"? Want to bet, SAP ByDesign will also be charging for "platinum support" of somewhere between 15-20%? What happens if I don't want supply chain? Why should I pay for it? If SAP wants to get it right this time, they need to earn the trust of their customers!
Posted by: Jason Corsello | September 19, 2007 at 11:45 PM
I agree that airlines have screwed us all over royally. I would much rather not get 'miles' - I can't keep track, rarely get to use them when I need them and they make me feel not-so-smart for not being able to figure them out.
On A1S - well, let's wait and see - this is fun!
Posted by: Anshu Sharma | September 20, 2007 at 02:28 AM
Vinnie, you know that I have always wanted this kind of pricing model. A cost that can be variable with the cycles of business. And it is a valid point about the "pioneers"... don't penalize those that got you to where you are. Reward them for taking the leap first.
Posted by: John Dean | September 20, 2007 at 10:00 AM