SAP’s annual Sapphire show and ASUG user conference in Orlando, Fla., produced a lot of noteworthy announcements, events and discussions about SAP’s product sets and future plans.
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First off, notes Ray Wang, a principal analyst at Forrester Research, is that SAP is moving full-steam ahead with its strategy to have customers upgrade their current systems. At the same time, SAP is making it clear that it’s aware of the pain of upgrades. “Enhancement packages are starting to provide value and are different from a traditional upgrade,” Wang says.
For those customers who don’t want to upgrade or pay SAP maintenance and support fees (especially the recently increased fees for new customers), news broke on Monday that Rimini Street, which provides third-party maintenance and support services for Oracle’s PeopleSoft, JD Edwards and Siebel packages, will start supporting SAP’s product set by early 2009. (See “Rimini Street Will Now Offer Maintenance Support for SAP’s R/3 Products” for more details on the announcement and why Rimini Street made the move.)
“Third-party maintenance is alive and well with Rimini Street offering options by the end of 2008,” Wang notes. “This is huge news as the demand for third-party maintenance is quite significant.”
As of Tuesday afternoon, there’s been “no reaction from SAP” in relation to the announcement, Wang notes. (To read an interview with the CEO of Rimini Street, Seth Ravin, see “The Man Behind ‘Half Off’ Third-Party Software Maintenance.”)
SAP also noted on Monday that small and midsize businesses now constitute 75 percent of its overall customer base, totaling more than 35,000 customers. (See “SAP Pays Partners, Goes with Gusto for Small and Midsize Business Customers” for an inside look at SAP’s SMB strategy.)
As for Business ByDesign, SAP’s new on-demand software offering whose rollout and goals are being scaled back, SAP executives say that they have not lost faith in the business model. (SAP had initially planned to achieve $1 billion in revenues and 10,000 customers for Business ByDesign by 2010; those goals, however, will take 12 to 18 months longer, SAP announced.)
It appears that SAP underestimated the technical and integration challenges in rolling out Business ByDesign, or BBD. Vinnie Mirchandani, a former Gartner analyst and founder of vendor consultancy Deal Architect, notes in his blog that SAP’s top execs—co-CEOs Henning Kagermann and Leo Apotheker—attributed BBD’s slowdown to “unique customer configuration and other issues they had not anticipated in the labs” during the initial BBD deployments.
Mirchandani also writes that SAP reiterated BBD pricing would not change much from the $150 per user, per month that has been previously announced. In addition, both Kagermann and Apotheker reiterated that BBD will offer a 10 times reduction in total cost of ownership, though they’re not quite there yet. That said, “even a three- to four-times reduction in on-premise TCO would be delightful to the current customer base,” Mirchandani adds.
To Forrester’s Wang, SAP executives “realized that they had to slow down the adoption for BBD,” he says. “There appears to be a focused pilot strategy of limiting the number of countries while they try to reign in overall costs and iron out some technology issues.”
Lastly, the union of SAP and RIM to deliver SAP’s business applications to BlackBerrys was another hot topic of conversation, Wang says. The recently announced partnership will start with SAP’s CRM applications; RIM will build the customized application for its BlackBerry handheld product line. The plan is to eventually design and deliver interfaces for SAP’s ERP and supply chain software suites as well.
Wang says that Forrester has spoken with more than 100 SAP customers “who are looking forward to the opportunity to use their RIM devices” with their SAP applications.