As SAP prepares to withdraw support for some ERP software, users should fight back, writes Allan Watton.
Computer Weekly recently reported on SAP’s plan to withdraw support for R/3 versions 3.1i, 4.0b, 4.5b and 4.6b in December 2003. This means that by the end of this year roughly half of SAP’s 19,000 users will be forced to upgrade. Alternatively, to continue to receive support, users have the option of increasing their support payments by 2%.
Let’s go out on a limb for a second here and ask whether it is possible for SAP to do this. Regardless of what is written in the contracts SAP has with its customers, it is possible that the company will be in breach of contract should it try to withdraw support or strongarm customers into increasing their maintenance payments.
This is because IT contracts are bound, like any other relationship with a supplier in any field, by the Sale of Goods Act. Under
the Act, SAP would be considered a “specialist” supplier – that is, a supplier you work with specifically because it has expertise in your particular IT need (ERP or CRM), or which has expertise in your industry (manufacturing or services).
As a specialist supplier, SAP is obliged to provide a broader and more thorough service than a generalist supplier. In particular, it is obliged to warn its customers about ways in which its products could potentially disrupt a business, and to help protect customers against that risk.
These obligations are known legally as “implied” terms of a contract. They can carry more legal weight than a contract itself. So they would usually apply regardless of any small print in contracts between SAP and individual customers.
Making virtually any change to a bet-the-business IT system could be considered risky. It is certainly so in this case, as SAP is asking its customers to upgrade to a system that is not yet 100% proven. In the words of Gartner analyst Derek Prior, “R/3 Enterprise is still in a quality control phase – it is too early to point to customer success stories.”
In fact, the software’s official release date was January 2003.
So is it possible for a specialist supplier to force its customers into a position where they are forced to outlay significant money for an upgrade they may not need, and which is likely to be both risky and costly?
Probably not. Any enterprise software company has a duty, in the implied terms of its contracts with customers, to continue to support its systems around which its customers have staked their businesses.
While SAP would maintain that it is not forcing customers to upgrade, the alternative is not cheap – a 2% increase in support costs to an already expensive SAP contract. Unless customers are prepared to band together to force SAP to behave more reasonably, the company is likely to continue with its plan.
What do you think?
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Allan Watton is managing director of Best Practice Group, a consultancy that specialises in IT procurement, dispute management and project recovery.