Support decision looms for SAP users

Many SAP customers will be grappling with a big decision for the next few weeks: Whether to go with standard support or the richer-featured but pricier Enterprise Support service.

The situation stems back to 2008, when SAP told customers they would be switched to Enterprise Support. SAP relented after a protracted outcry from many customers, saying in January it would once again give customers a standard support option.

This lower level is priced at 18% of a customer's software license base, with adjustments made each year according to inflation, beginning in 2011. Enterprise Support's list price is 22%. Contracts signed up until July 5, 2008, are subject to a previously announced incremental price ramp-up, which will push up the cost to 22% by 2016.

But even as it offers customers a new choice, SAP is using a carrot-and-stick approach to lure customers onto Enterprise Support. If standard support customers move to Enterprise Support by March 15, their fees would be 18.36% this year and then follow the ramp-up path. But if they switch after that date, the price starts at 22%.

There are key differences between Standard and Enterprise Support. The former provides "problem resolution, knowledge transfer, quality management and more" to keep SAP systems updated and running. Enterprise Support wraps those features along with a focus on business continuity, business process improvement, protection of investment and reducing total costs of IT operations.

All told, users still on the fence must carefully deliberate many factors before deciding which option is right for their company, Altimeter Group analyst Ray Wang told members of the Americas' SAP Users Group during a Webinar Tuesday.

Wang placed SAP's customer base into four camps.

"Savvy old-timers" -- companies with older but stable legacy systems, little interest in expanding their use of SAP software and that have few contacts with vendor support -- should stick to standard support for the short-term and weigh options like third-party maintenance or self-support, Wang said.

"Increasingly doubtful" users, which similarly have few plans to add more SAP licenses or products but do rely on support to some degree, should contemplate trying Enterprise Support for a period and determine whether it is worthwhile.

"Committed but conservative" SAP customers are those who are planning further investments in the software and also take advantage of support services, Wang said. He recommended these users stick to standard support. They should also consider going to third-party maintenance, but also complete any desired upgrades, since such a move would end their ability to get product updates.

Finally, "flag-waving diehard" SAP users, classified as those with a new implementation or plans to expand, should move to Enterprise Support now, Wang said. But they should also attempt to eliminate shelfware by renegotiating their license contracts, he added.

In addition, Wang urged ASUG members to preserve their contractual rights to third-party maintenance.

One user attending the Webinar questioned whether third-party maintenance providers like Rimini Street could scale up operations if droves of SAP users began seeking their services.

That fear is likely unfounded, Wang said. For one, moving to third-party support would be a gradual process. Second, if there was a major uptick in interest, "the big system integrators would probably all jump in" to the business, he said.

SAP and rival vendors like Oracle do not wish to see this happen, as software maintenance provides major revenue streams even when new license sales are tepid.

Oracle is currently suing Rimini Street and former SAP subsidiary TomorrowNow, which provided support for Oracle applications, on grounds the companies violated its intellectual property.

Copyright © 2010 IDG Communications, Inc.

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