SAP has written to its customers informing them of a cost increase on annual maintenance fees. What exactly are your alternatives?
- Cliff Saran,Managing Editor
Published: 15 Sep 2022 14: 02
In a letter to customers, SAP has announced it’ll be raising maintenance fees by around 3.3% because of changes in the macroeconomic environment of high inflation rates reflected across regional price indices.
Because of higher energy and labour costs, in addition to increasing expenses for third-party services, SAP said it had made a decision to adjust the support fee for existing support agreements for SAP Standard Support, SAP Enterprise Support and SAP Product Support for Large Enterprises, in line with the respective local Consumer Price Index (CPI).
Consistent with standard business practice worldwide, the terms of our agreements enable an annual adjustment of the support fee following the initial term and first renewal term. In keeping with the terms of our agreements, SAP will moderately raise the annual support fee for these SAP support agreements by way of a maximum of 3.3% (or the neighborhood CPI rate, if lower), effective January 1, 2023.
The business remarked that this upcoming increase will be the first-time in nearly ten years that it has had a need to adjust maintenance fees, having kept support prices stable to a big extent for days gone by 10 years, including waiving adjustments through the pandemic.
SAP said the increase didn’t represent a rise in list charges for SAP support offerings for new purchases of software. SAP is engaged within an open dialogue with this customers and user groups to own right support offerings for his or her needs, at predictable commercial conditions. Transparency is essential for SAP in its relationship with customers, and SAP will always make an effort to maintain a dialogue around important areas such as for example support, it said in a statement.
Forrester principal analyst Liz Herbert said the changes highlighted the significance of sound contract negotiation when signing or renewing a deal. While maintenance fees remained stagnant for a long period, it is a reminder to ensure your contract protects you in times like these and you don’t find yourself surprised, she added.
Considering how affected SAP users should proceed, Herbert said: When it comes to you skill concerning the fees themselves, this can be a period to renew stalled conversations about migrating to cloud either from SAP or your competition. Many firms are migrating to cloud for better agility and a far more modern applications environment built for real-time decisioning and AI.
In Herberts experience, SAP has historically been favourable in contract negotiations when its customers make the proceed to log off their older software and stick with SAP. If you opt to look at competitor products, they too will probably behave favourably because they have a significant need to win business from SAP. You can even consider third-party maintenance from companies like Rimini Street, which typically saves you 50% off maintenance fees.
However, third-party support, such as for example that provided by Rimini Street, means organisations choosing this program are take off from future SAP enhancements, Herbert warned. However, she said that utilizing a third-party enterprise software provider did provide a solution to keep an ongoing product running, including any mandatory regulatory fixes.
You might explore quitting ownership of existing licences and reducing maintenance this way, though this is often a difficult option used, she added.
Also, most customers can save costs and optimise in lots of other ways, therefore may use this announcement as a catalyst to check more broadly no matter what. Its a great time to check out infrastructure/cloud, support resources, shelfware and redundant systems. That is also a great time to check out whether outsourcing or automation could create more efficiencies and potentially an improved experience for the business enterprise.
As Herbert noted, third-party support offers existing SAP customers a method to steer clear of the price hike in maintenance fees. Rimini Street may very well be among the providers set to reap the benefits of SAPs plans.
Discussing the SAP statement, Emmanuelle Hose, general manager for Europe, the center East and Africa (EMEA) at Rimini Street, said: This is simply not the news headlines SAP customers desire to hear, especially in today’s economic situation. At the same time if they are under great pressure to create decisions about their long-term investment in SAP, because of the vendor likely to pull the plug on full support for ECC by 2027, customers need just as much financial flexibility and time and energy to plan as you possibly can.
Hose said SAP users have to consider how they build out an ERP environment that’s composable and agile, this means unpicking highly customised existing systems.
SAP customers should evaluate if moving to S/4 HANA is even your path forward. Considering that so much IT budget is focused on keeping the lights on, any upsurge in support costs will bring about less resources open to unpick such complex ERP systems, she said.