For those who do not act fast, standard maintenance support for SAP (News - Alert) is about to get more expensive.
The price for standard support is being raised from 18 percent to 19 percent effective July 15, according Larry Dignan in a ZDNet post.
Customers who negotiate contracts before July 15 will continue to receive the 18 percent rate, however.
“This moderate adjustment does not apply to any existing maintenance contracts for SAP Standard Support closed before July 15, 2013,” noted the company. “We encourage you to take advantage of the opportunity to place purchase orders with SAP Standard Support ahead of this change at the existing 18 percent rate until July 14, 2013.”
The increase does little to SAP’s bottom line but could significantly embitter customers, suggested Dennis Howlett in a separate ZDNet editorial.
“Right now, SAP maintenance and support revenue is around the $11 billion mark. If SAP is to be taken at its word then the best case revenue impact adds something around $25-30 million to the top line but likely much lower. In SAP terms that's petty cash,” noted Howlett.
“My guess is that this move by SAP is designed to lock in 'steady state' customers to the current price as a long term revenue protection measure while it attempts to encourage customers to switch to the Business Suite run on HANA and so re-ignite the core apps sales engine,” he added.
The price increase could drive customers to third-party support companies such as XS International.
Advertising a cost savings on support between 20 and 40 percent, XSi brings 20 years of maintenance support and can provide a single maintenance contract for all networking support needs. It provides program management for cross-platform environments, specializing in HPC and enterprise-level equipment, and can support for end-of-life equipment, according to the company.
“How have SAP's cost of support increased to justify this increase in my maintenance fees?” asked Frank Scavo in a recent blog post, principal for consulting firm, Strativa.
“Normally the cost to support mature products decreases over time, as issues with the program code are resolved,” he added. “Offshoring of application support and deflection of support activities to SAP's user and partner network also have introduced support efficiencies. Shouldn't SAP be considering a reduction in maintenance fees rather than an increase?”
The fee increase only affects Standard Support contracts. BusinessOne customers will not be affected, according to Howlett.
This is not the first time SAP has attempted a maintenance fee increase. A few years ago SAP raised support rates from 18 to 22 percent. Customers revolted, however, and SAP backed down.
“This price increase is easier to digest, but it's unlikely that customers are going to be pleased about it,” noted Dignan.
Edited by Rachel Ramsey