As SAP Support Costs Spike, Users’ Group Leader Preaches Collaboration — Not Rebellion

In mid-July, SAP announced that it would be increasing the fees on its software support program for existing customers, from 17 percent of contract value to 22 percent. On Jan. 1, 2009, all customers will begin to transition out of SAP’s Standard and Premium Support options and move to Enterprise Support, paying for and receiving the new support options of the more expansive program.

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The reaction from many users in the Great Britain SAP ecosystem was best summed up by the chairman of the U.K. & Ireland User Group: “The mandatory nature of this change along with the increase in cost has received hugely negative feedback from our membership to date,” stated Alan Bowling, the chairman of the SAP group on July 25th. “In real terms, this is a 29.4 percent increase in costs over the next four years for existing SAP customers, and is proving to be a particularly difficult area to accept.” (For more on that, see “U.K. SAP Users Angry Over SAP Support Price Increases.”)

Across the pond, Steve Strout, CEO of the Americas’ SAP Users’ Group (ASUG), released a statement on the 25th to CIO with his organization’s take on the changes to the support costs. And the tone was quite different than that of Bowling’s remarks.

“We understand that market demands have influenced the SAP decision to expand their support strategy,” Strout states. “We are also aware there have been some negative remarks made by industry analysts calling for user groups to rebel against SAP; however, we firmly believe that ASUG’s relationship with SAP, and our members, must be collaborative—thus allowing us to influence SAP to make their decisions with our members—their customers—top of mind.” (For more on SAP’s strategy, see “Five Things About SAP’s Strategy That You Need to Know.”)

Strout acknowledged that, given the economy, no ASUG member is excited about the prospect of price increases. (ASUG is the world’s largest SAP user group.) However, he says that it’s ASUG’s “responsibility to educate and influence SAP on what our members desire as well as educate our members on what Enterprise Support is and how best to take advantage of it.”

The True Cost of SAP Enterprise Support

One important consideration that SAP customers should understand, Strout points out, is that “maintenance of comparable technologies is most often significantly higher than 17 percent and in some cases it’s closer to 27 percent,” he notes. “What’s more, SAP has not had a price increase for maintenance in 10 years.” (In February 2008, the software giant raised maintenance fees for all new SAP customers.)

In addition, the support price increase for current customers isn’t as bad as the “17 percent to 22 percent” numbers make it appear, Strout contends. It’s a phased approach—a move from 17 percent to 18.4 percent in 2009. “And only for companies that don’t already have other contract language in place,” he adds. “We suggest that each company review their current maintenance contracts to help determine their individual impact.”

SAP has billed Enterprise Support as the “next generation of support offerings.” Many of SAP’s users, however, think the program is superfluous, according to the U.K. & Ireland User Group’s Bowling. He states that “many of our members may not want or need this extra level of support and therefore are reacting negatively to having a new support product and the associated increase in costs forced upon them.”

Strout’s more diplomatic and collaborative statement notes that as a “trusted advisor to SAP,” ASUG is “often asked to provide our input on programs while they are still being formulated, and SAP’s Enterprise Support announcement is a great example of this in action.”

In SAP’s July 16th support-fee increase announcement, ASUG Chairman Mike O’Dell was quoted as saying that “SAP consulted with multiple ASUG members for guidance in creating a transitional plan to SAP Enterprise Support that took into consideration organizations of all sizes and implementation stages—hence the graduated timeline.” O’Dell is the CIO of Pacific Coast Companies. He added: “At ASUG, we do whatever it takes for our members to succeed.”

Strout stresses that point too: That the ASUG Board and he have worked closely with SAP executives to persuade SAP to implement a phased approach to the maintenance increase associated with the switch to Enterprise Support. (See “Q&A: Rate the SAP Consultant: SAP User Group Launches Database to Help Companies Find Help They Need” to read how ASUG is trying to help SAP’s skillset shortage.)

“However, in all fairness to both our members and to SAP, time will tell whether these additional services are being used by customers—and just as important, worth more money than the current costs,” Strout states. “It is our responsibility to our members to ensure that we hold SAP to what they say: companies should see a benefit.”