It has been two months since we spoke to Uwe Hommel about SAP's price increase around its Enterprise Support. He had promised to provide details with metrics on "value" customers get. None so far. But at last week's TechEd in Berlin, Co-CEO Leo Apotheker provided other SAP insights on the topic. Dennis Howlett has extracted some of his comments and also has full links to his keynote and press conference.
Leo talks about Solution Manager as one of the bigger benefits of Enterprise Support. Customers will "never, ever have to test your entire environment again when you apply enhancement packs" - suggesting a TCO reduction due to lowered testing greater than SAP's price increase.
For a vendor which has made a ton of money selling Governance, Risk and Compliance the last few years, it is a naive statement at best. SAP is not the arbiter of what gets tested, in what regression sequence etc. There are plenty of auditors, quality assurance employees and outside experts who make that decision. And even if Leo is correct, it will take 3-4 years for early adopters to test the premise, share results before it is propagated across the customer base and there is material impact on TCO.
But the fundamental question SAP keeps dancing around is did the base 17% deliver value in the first place? Looked at from a customer's perspective for the last several years, when you amortize the annual maintenance cost by the number of support calls logged, new function points implemented etc - the $ 640 military commode looks awfully cheap.
Then there is SAP's own cost base. They have offshored some of the support. There is more automation - more customers get self-service support answers through knowledge bases. Their community is handling many routine support questions (and customers are funding that community, not SAP). In the spirit of rollbacks, SAP support costs should have been declining for the last several years.
SAP knows that only too well. SAP offered Oracle customers cut-rate maintenance through its TomorrowNow unit, but steadfastly told its own customers they did not deserve a similar, low-touch offering.
During the press conference, Leo said it would take over half a day to go through all the other value Enterprise Support deliver to customers.
Leo, here's an offer. I am sure at least some SAP US employees are fans of the Phillies. In the next 2 weeks, they may be making a few trips to my neck of the woods for the World Series. I will gladly spend 4 hours with them if they can showcase what Uwe had promised to provide.
Unless, of course you have frozen their travel in these turbulent times.
In which case, I hope you can empathize customers need far more justification for even paying you 17%. Even if you choose to dismiss what Forrester has surveyed in your customer base. Or my repeated statements that enterprise software maintenance is one of the highest sources of "empty calories" in IT budgets.
Update: Tom Wailgum at CIO Magazine and Frank Scavo at Enterprise System Spectator weigh in.
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Posted by: Fast Weight Loss Diet | July 01, 2009 at 09:33 AM