It has been simmering for a couple of weeks. As Dennis Howlett reported, Ray Wang of Forrester tweeted the following: "Hearing from SAP customers that there are new clauses that will force customers to commit to no Third Party Maintenance.”
That set off alarm bells in Walldorf, including concerns about anti-trust regulatory reviews and of course, worry in many customers that SAP may be becoming more aggressive in its contracting.
So why has Vinnie Maintenance stayed on the sidelines?
I was assured by a SAP representative it was not true and I wanted them to ferret out if may be a truant salesperson had asked for language in a specific contract.
Instead the answer comes via InformationWeek.
“The answer is no, SAP does not prevent the use of third-party maintenance providers, said Bill Wohl, SAP's VP of global field communications. "We promote the concept of customer choice and we have for years on this topic." Wohl added”
Now, he swings the pendulum way the other way. We "promote the concept of customer choice"?
For years, SAP has offered Oracle customers third party maintenance via TomorrowNow. While it is now in litigation over that unit with Oracle, every time it was asked why it did not offer its own customers a similar “scaled down” offering, it said “our customers are not asking for it”. Instead it has been fighting an uphill battle with its customers to increase maintenance up from 17 to 22% a year. I am still waiting for metrics defending the increase from Bill and Uwe Hommel based on our conversation last August.
I have said many times before software maintenance reflects the most empty calories in IT spend from a buyer's perspective and here's why:
a) paying for bug fixes smacks of "double jeopardy". The software industry
delivers shoddy code and charges a license fee for it (with minimal warranty),
then expects buyers to pay maintenance to get bug fixes.
b) most enhancements
(from at least the larger) software vendors deliver tend to be "me-too" and
years late. Ask Oracle's CAI partners from a few years ago the inherent tension
in worrying about Oracle introducing a competitive product while also acting as
a partner. I was aghast a few years ago to hear an SAP executive say "shame on
us if we cannot learn from our application partners". The charges against
Microsoft from smaller vendors which partnered with it are well documented.
Larger vendors do not pay royalties to the innovative vendors, yet charge
customers for it like it was original IP
c) Many periodic enhancements,
especially in core ERP modules, are driven by statutory changes. The algorithms
are publicly available, not proprietary IP of any software vendor
d) During
implementation before they go live on software, few customers tax support lines.
Indeed they are under another "double jeopardy" - paying the systems integrator
(often Oracle or SAP Consulting) in addition to paying maintenance.
e)
Similarly after year 5, the support demands of most customers drop off as they
stabilize their production environment. Fair maintenance pricing would be in a
bell curve - gradually ramp up years 1 and 2, gradually ramp down starting in
year 5. But today the software industry expects full rates from day one through
termination
f) Most software vendors have moved maintenance of older releases
offshore to India, E. Europe etc, but have kept the savings without passing any
of that along.
If SAP (and Oracle and other software vendors) offered various maintenance plans depending on a bell curve of customer needs and their own delievry economics, we would not need to talk about third party maintenance.
That is the elephant in the room.
Everything else is tip-toeing around the room to the tune of a bunch of salivating attorneys.
