But in getting this choice, customers also learned another thing – they have a strong voice.
The Enterprise Support affair opened the door to something rarely covered in the enterprise software world – negotiating lower maintenance contracts. As one CIO put it to me, maintenance and support was never even questioned in his budget. But the news drummed up by the Enterprise Support affair brought it to the attention of the CFO, and gave him the idea that it’s an area for cost savings.
And it won’t take long for more value questions to come up. For starters, there’s the lingering question of whether, with the adjustments for inflation, Enterprise Support will wind up costing the same as Standard Support in the long run.
As Joshua Greenbaum put it to me in an interview when SAP first introduced the KPI program, “This issue of, ‘Why am I paying this enormous fee?’ isn’t going to die.”
Perhaps more than open-source, or SaaS, SAP’s bungled rollout of Enterprise Support has forced customers to look at what their maintenance and support dollars are actually buying them.
“The genie is out of the bottle: SAP’s decision to backpedal may very well mark of point of inflection for the software industry as a whole,” Strategy Partners’ Helmuth Gumbel wrote on his blog. “Negotiating maintenance down is ‘in,’ – it may very well become a key topic at golf courses.”
Customers have already figured out ways they can get concessions. For instance, Forrester’s Duncan Jones said that customers expressed the distaste for the new maintenance and support policies by not spending with SAP on discretionary projects.
“I think they were listening to their sales channels, and the people who processed purchase orders from customers who had nothing to do all year,” Jones said. “I think it was the impact on license revenue as much as the vocal complaints.”
And they’re not only looking for concessions on maintenance and support from SAP anymore.
Gumbel writes that, “the topic has already spread to parts of SAP’s ecosystem: some software vendors that supply add-ons to SAP reportedly have been pressed by customers to reduce their maintenance bills and are quietly cursing SAP for putting this topic on the agenda.”
And won’t SAP customers inspire those of other vendors, like, say, Oracle?
My colleague Barb Darrow reported that there were rumblings amongst Oracle’s customer base to the such back in March – saying customers were demanding to pay for only the coverage that they needed, or even threatening to switch applications altogether. She wrote: “One Java-centric VAR, who spoke on the condition of anonymity, said some of his BEA WebLogic customers are moving to alternative application servers just to get away from Oracle.”
“I have two BEA/Oracle customers right now that are committed to converting from WebLogic,” the VAR told Darrow.
Hindsight is 20/20. Maybe if SAP hadn’t introduced Enterprise Support at such a difficult economic time, and maybe if the value message around the rollout had been clearer, things would have turned out differently.
Or maybe, as Gumbel put it, “it would have been better if Leo Apotheker wouldn’t have touched the subject in the first place.”]]>
And if you’re even marginally tuned into SAP, you know the vendor’s big push over the last year or so has been to sell software that will help companies with sustainability initiatives like Wal-Mart’s.
The two took the stage to highlight their respective sustainability stories at the National Retail Federation annual trade show yesterday in front of a standing-room only crowd of attendees. SAP also shared details on its leading sustainability practices, and its product roadmap.
SAP says it has some 2,000 customers using its sustainability software.
Too bad Wal-Mart isn’t one of those customers.
“Not yet,” was the answer SAP Chief Sustainability Officer Peter Graf gave when asked whether Wal-Mart was using any of SAP’s sustainability software.
To be fair, a deal could be in the works. But it made me question who’s actually buying this sustainability software. It would seem that Wal-Mart is a natural fit for SAP’s software. It’s a big SAP customer, and a total of 85% of Wal-Mart’s suppliers are SAP customers.
If Wal-Mart isn’t running it, who is? And if Wal-Mart isn’t running it, why? Have they found something better out there? Or have they found they can manage and track these programs with software they already have?
It would make sense. We’ve heard over and over again that companies are trying to get more value from the very expensive applications they already have in place.
And by extension, the mood at yesterday’s NRF show was one of cautious optimism. Most of the folks I spoke with said they weren’t planning any big application purchases this year. In fact, a few told me they weren’t at NRF to look for applications at all.
Graf said sustainability is no longer “all tree-hugging and luxury.” I think that’s true. There are few businesses out there that haven’t figured out that switching to more efficient light bulbs or idling computers will save them money in the long run, or that consumers are starting to care more about sustainable business practices in the creation of the products they buy.
But is sustainability software still a luxury?]]>
That means more discounts on software, as well as more calls and emails from ERP account representatives, pitching more add-ons as they try to increase volume in existing accounts.
But it could also mean some changes in the makeup of IT departments.
In its recent ERP trends report, Forrester asserts that there’s a vast shift underway in the ERP vendors’ business model. They need to increase recurring revenue streams to make up for what they’ve lost in non-recurring lines like license sales.
Maintenance fees are one way they’ll look to make that up. In turn, SAP is also hoping to hang on to as much of its net new sales and existing customers as it can by offering subscription pricing for its on-premise products, an attractive option for the myriad customers out there without a whole lot of capital.
Another major initiative will be selling new services. Enterprise applications vendors will move more into hosting, application life-cycle management, platform as a service, collaboration and business process outsourcing, according to Forrester. These services may be provided through the vendor, or through partners.
“Traditionally, there’s been a line in the sand between the support the vendor provides and the support the customer does internally,” Hamerman said. “What’s going to happen is that line is going to become blurred, with the vendor taking on more support service that the company typically does.”
We’re already seeing evidence of this. When Software AG bought IDS Scheer last year, analysts asserted that one of Software AG’s major motivations was IDS Scheer’s professional services business. Additionally, Lawson is getting into the hosting business, according to Forrester’s Paul Hamerman. Meanwhile implementation partners like Deloitte, which doesn’t offer much in the way of ongoing support or hosting, are trying to expand into those areas, according to Forrester.
Vendors, and likely in SAP’s case their partners, will therefore take on more of the support services that companies typically do themselves.
With that in mind, the types of skills companies should look to foster on their teams are the things that won’t soon be commoditized -like skills related to business process support, Hamerman said.]]>