SAP tweaks support offerings but doesn't waver on price increase

Vendor extends regular support period on apps; users still uncertain about new program's value

SAP AG today said that it is extending the regular maintenance period for its core business applications from five to seven years and that — in a partial olive branch to angry customers — it has sweetened the features of its mandatory new Enterprise Support program.

The maintenance extension, which applies to the existing SAP ERP 6.0 and will also cover future core apps that are added to the SAP Business Suite, modifies the software vendor's current "5-1-2" support policy. That guaranteed regular maintenance on a product for five years, after which users could buy extended support at a higher price for one year and then add two more years in return for another price increase. The new "7-2" policy provides seven years of regular maintenance and an optional two-year extension, SAP said.

SAP announced the ERP 6.0 applications in 2006, originally under the name mySAP 2005, and Forrester Research Inc. analyst Paul Hamerman said that some of the customers he works with were already starting to get concerned about the five-year limit on regular support. The extension should be welcome news to them, he added.

The vendor had already made it clear that the 6.0 release would be its strategic ERP platform through at least 2010, having announced two years ago that all new features would be delivered in add-on "enhancement packages" instead of as part of a full upgrade. The maintenance extension could mean that SAP now plans to keep that strategy in place even longer.

"This is where we expect to be for some time," SAP spokesman William Wohl said. SAP is trying to ensure that customers can make long-term plans around ERP 6.0, he said, while adding that the company will continue to aggressively add features through the enhancement packages.

With the changes to Enterprise Support, SAP is seeking to appease users who have protested loudly since July, when the vendor disclosed that it planned to shift all of its customers to the fuller-featured but more expensive new program.

But SAP, whose co-CEO Henning Kagermann defended the support switch at a conference in New York on Wednesday, still isn't making any concessions on the higher costs. Instead, the company said it's adding new wrinkles to the support program, such as offering users up to five days of remote advice per year from its software architects on the potential value of enhancement packages and how they could be deployed.

In addition, SAP is trying to provide "additional clarification" about Enterprise Support's features, which include what it described as "continuous quality checks" and a single point of contact for customers.

SAP has repeatedly said that a universal switchover of customers to the new support program is necessary because of the increasing complexity of IT environments, and that the change will result in lower costs overall for users.

But a survey conducted recently by the SAP User Group Executive Network (SUGEN) showed that 90% of the users who responded don't fully understand the features of Enterprise Support or its potential cost benefits, according to a separate announcement made jointly today by SAP and SUGEN.

SAP and SUGEN, which was founded last fall and includes representatives from 31 SAP user groups worldwide, said they plan to work together to develop a set of key performance indicators for assessing the value of Enterprise Support. The team they're setting up will evaluate the performance indicators against customer expectations and adjust the rollout of Enterprise Support as needed to ensure that the program meets the quality measures being put in place.

SUGEN officials couldn't be reached for comment today. In a statement that was included in the announcement with SAP, Matthias Herzog, the user group network's vice chair, said that the joint effort is needed "to overcome the differences between SAP and its customer base [in order] to ensure value is delivered for the increased maintenance fees."

But China Martens, an analyst at The 451 Group, questioned whether SAP's gestures toward users on the new support program will have much of an effect. "Ultimately, this all seems to be shutting the barn door after the horse has bolted," she said.

SAP also said today that it will work with its user groups on a migration plan for helping users of its earlier R/3 applications upgrade to ERP 6.0. Convincing companies to make that shift is a major goal for SAP; only about 12,800 of its customers are running ERP 6.0 now, out of a total base of 76,000 users, a figure that includes the ones gained from SAP's acquisition of Business Objects SA earlier this year.

Copyright © 2008 IDG Communications, Inc.

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