SAP blows away maintenance cash cow

News Analysis

SAP blows away maintenance cash cow

Cliff Saran

SAP appears to have listened and taken on board user feedback on how it should charge for its maintenance contract.

The ERP company and the SAP User Group Executive Network (Sugen), a global federation of 12 key SAP user groups, have reached an innovative agreement.

It will mean that SAP will be required to meet key performance indicators agreed with Sugen before it can incrementally increase its maintenance fees by up to 22%.

Bill Wohl, vice-president at SAP Global Field Communications, says: "Any time we ask a customer to pay for a service we must demonstrate value."

SAP and the user groups represented by Sugen will conduct benchmarking exercises to measure the improvements SAP makes to its maintenance service.

Alan Bowling, chairman of the SAP UK & Ireland User Group says: "We are linking real delivery of value to SAP's price increase."

The KPIs cover four business continuity, business process improvement, protection of investment and total cost of operations. SAP will be required to reduce the number of emergency software changes it issues.

Bowling has called on the software industry to follow SAP's lead by providing KPIs for value on maintenance contracts.

Gartner research director Thomas Otter described SAP's approach as novel. "This is the first time a software supplier is offering a tangible value proposition for support. Companies have previous paid maintenance without assessing the value."

CIOs are looking more closely at maintenance, so it makes sense for SAP to increase transparency of its maintenance programme. Other software suppliers may be forced to take a similar line.

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