Posted by Duncan Jones on December 9, 2009
At yesterday's Influencer Summit, Dr. Uwe Hummel (EVP and Head of Active Global Support) explained to industry analysts why SAP believes so strongly in its Enterprise Support product. In fact, it is so convinced in proactive support and the positive impact on customers' SAP application management and operation costs that it decided to protect them from making the mistake of declining to buy it - by making it mandatory.
We all know how customers reacted to that idea, and how SAP has reconsidered its approach since the initial announcements. Yesterday's session focused on SAP's uniquely innovative program to track the actual benefits obtained by customers using Enterprise Support. SUGEN, the association of independent SAP user groups, agreed 11 application-management-related KPI that it would track at 56 member sites. The first results are now in, and though SAP isn't quite ready to publish them, from what we saw under NDA, there has been a clear and consistent improvement in measures such as 'failed system changes'.
However, even if these results enable SAP to make a convincing argument that enterprise support is beneficial for most customers, it hasn't yet answered the important questions that we've raised on behalf of sourcing and vendor managers:
- Do the KPI gains justify a 30% increase in the price of maintenance? OK, SAP is only trying to match Oracle's 22% rate, and is phasing in that increase over 7 years, but few companies have that sort of space in their IT budgets, whereas SAP's maintenance business is already extremely profitable.
- If SAP believes so strongly in its strategy, why doesnt it make enterprise support an optional add-on? SAP may want to standardize its offering upwards rather than downwards, but customers that can't afford or see insufficient value in the premium package right now should be able to opt out.
- Why doesnt SAP have a special approach for customers that have outsourced their application management? For these companies, it may be the outsourcers that benefit from Enterprise Support, not their clients. The clients could stay with basic support if enterprise support were packaged as a separate service that SAP sold directly to the outsourcer. Currently, the SAP customer may have to renegotiate its multi-year outsourcing contract to recoup any cost savings that SAP's active support program delivers.