“Does Chuck Phillips really get it?”
That’s how SAP’s Bill Wohl, who wanted to chat about SAP’s new Enterprise Support agreement, opened up a conversation with me Wednesday. He was referring to Oracle’s decision to give its users on older releases a couple more years at the rates on their current contracts — 22% of net licensing fees
My ears perked up. Nothing like a little SAP vs. Oracle baiting– the Red Sox vs.Yankees of the enterprise software world — to brighten a dreary Wednesday afternoon.
SAP, of course, is riding a wave of good will churned up by its recent decision to delay implementing an SAP maintenance fee increase until it proved it was worth the money. It’ll do this by tracking certain KPIs on a group of 100 customers.
“We have really worked exceptionally hard through some very painful moments in collaboration with our user groups to figure out a formula and I think we’ve found one now,” Wohl said. “That’s pretty much game changing.”
“The best [Oracle president] Chuck Phillips can do for his customers is say ‘I’m going to delay raising your price for a year or two’ on a bunch of legacy applications that we’ve not innovated in three to four years?,” Wohl said. “And so I’m left asking the question, do they really get it over there?”
OK Oracle you’re up. And SAP’s just thrown strike one.
But before we play any further, let’s remember that SAP sort of threw a ball on this issue to begin with. SAP introduced Enterprise Support back in July, and launched it in January. It didn’t have this formula attached to it then — that was something negotiated by user groups.
“I admit it, we went to the woodshed and back and for some user groups this was really a serious issue,” Wohl said. “But I still maintain through it all the issue was really a function of, how do we describe the value proposition for our members? Price became a lightning road, but it wasn’t the biggest issue. The biggest issue was —show us the value.”
Fair enough, but what about those like Salesforce.com’s Mark Benioff — who say these software maintenance fees aren’t even worth it in the first place — you know, his recent calls for “the end of maintenance?”
“Mark would like the world to believe that because it’s a good sound bite that there is no cost of maintenance in on-demand software and that’s just not true and he knows that,” Wohl said, adding that it’s “baked in” to the per seat cost.
Moreover, Benioff is also “trying to play in a big-boy’s game without a solution that gives him legitimacy to play. He’s not offering a solution comparable to SAP, or to Oracle for that matter, by any stretch of the imagination. He just wants to play in the game.”
So who’s really ahead in the count on when it comes to maintenance fees? Does SAP now have the upper hand on Oracle? Or do vendors like Salesforce.com, who, like the Tampa Bay Rays in the American League East, still threaten to be a contender?