SAP Customers Unite! (Don't Believe the Hype)
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SAP may have finally jumped the shark, arguably sinking further into irrelevancy by imposing a single-tier pricing structure for maintenance of SAP ERP that will send small and midsize customers to rivals like Salesforce.com and NetSuite--including those who might have otherwise waited for (delayed) Business ByDesign. Naturally, SAP is spinning this broad price increase as a benefit to customers. SAP Enterprise Support is the next generation of support offerings that supports mission-critical business processes and heterogeneous software environments. In the six months since its release, the offering has experienced positive market adoption, with more than 350 customers signed on. As part of this transition, current customers will begin experiencing some of the added benefits of SAP Enterprise Support, beginning in July at no additional cost, with graduated pricing beginning in January. But it's pretty obvious that customers with more narrowly structured, less expensive maintenance packages weren't banging on SAP's door, begging to be locked into a more expensive contract that they probably don't have much use for. That's not just me talking. Ray Wang, a Forrester analyst who reviews a huge number of SAP customer engagement contracts, credits SAP with at least offering more services in exchange for the higher costs, but adds, "I just don't know who uses all this [extra] stuff." It's like an insurance policy that has "more coverage than you could possibly use," he told me. But Elaina Stergiades, a senior research analyst in the software support services group at respected market research firm IDC, has a totally different take. In the SAP press release announcing the new blanket support policy, she is quoted as saying: Enterprise customers are demanding a more robust support solution from their support providers and SAP is answering that call with SAP Enterprise Support... With SAP Enterprise Support, SAP will be able to provide a more complete software support solution for its customers. Could you have paid her to put a more positive spin on SAP's new program? IDC's spokesperson, Mike Shirer, denied any conflict of interest. In response to an e-mail, he wrote: "SAP is an IDC client. However, IDC does not receive any form of compensation when an analyst comments on SAP as a company or the markets in which SAP operates. IDC's market research and analysis are developed independently from any client relationship." I've known Mike for a few years, and I take him at his word. A lot of businesses work along these lines--including publishing and financial services. Moreover, Forrester also has a commercial relationship with SAP--Ray told me he even gives SAP an opportunity to fact-check his reports before publishing them; and yet Ray has come out swinging at SAP from the heels. Ray could even be accused of (or praised for) instigating a customer backlash: Now is the time that customers should leverage their independent users groups to organize a campaign against this maintenance fee increase. Groups such as ASUG, DSAG, SAP Users Group UK & Ireland need to step up to the plate and find a solution to this increase. This will be the real test of these users groups effectiveness. It will become painfully obvious which individuals in leadership positions have been under the influence of SAP and which individuals will be willing to back the end users. How come he gets away with trashing a customer while Stergiades doesn't? There are two ways of explaining this disparity: 1) Stergiades really believes that customers want to have to pay higher maintenance fees (keep in mind that premium maintenance contracts were already available for the asking--you just weren't forced to buy them before); or So who gives you advice on enterprise IT? Do you have time to do your due diligence and make sure the advice you're getting in unbiased? Maybe the only option is what Ray suggests--get together with your fellow SAP prisoners (I mean customers). SAP Users Unite! Let me know what you think about Enterprise Support. One more thing: ZDNet's Dennis Howlett crosses the line by referencing "paid support from IDC analyst Elaina Stergiades." He's entitled to say that commercial relationships may have influenced her point of view, but he's basically calling her unscrupulous without any basis in fact. The public trust is her livelihood, Dennis--same as for you and me. Shame on you for accusing someone of that kind of dishonesty without offering a shred of proof. |

Comments (2)
Now if these customers were using open source at least they'd have a choice.
Plenty of good open source ERP packages for those smaller organisations that don't need those enterprise level costs..
Posted by Peter Fletcher | July 18, 2008 6:10 AM
I think you are slicing his statement a bit thin. - SAP does pay IDC.
I think the broader question is how independent is IDC? I do think it tries to be but best I can tell few very of its analysts have ever worked for corporate IT and have evaluated/negotiated technology from a buyers POV, or have independently advised buyers on that side of the fence. When I was at Gartner in mid 90s, we knew it would be troublesome when vendor revenues exceeded buyer revenues. Garter is there today, IDC has been there for years and gets 80+% from vendors. You know how that works - analysts try to be independent but their sales and management are driven by revenues and are just not as sensitive about independence.
Posted by vinnie mirchandani | August 3, 2008 8:44 PM