In my analysis of SAP's recent increase in maintenance fees for all of its customers, and why that pricing should actually have gone down, I might have left some of you hanging: "Well, now that you've told us we're basically stuck with SAP, then why don't you give us a solution, Mr. Bigshot Opinion."
Fair enough. I'm going to turn to Forrester Research's star ERP analyst Ray Wang and his recent analysis on how companies are coping with SAP's pricey maintenance hike (from 17 percent to 22 percent) and his seven suggestions on how to deal with the unwanted costs.
Make no mistake: This is a hugely important effort for you. "Prepare to influence SAP," Wang writes, "or face the consequence of long-term lock-in."
1. Fight for Your Discount. Wang first advises his clients to take a long-term view on contracts. "While a small discount in the past was offset with 17 percent maintenance over a 10-year period, customers should seek greater discounts in licenses to offset the maintenance fee increase," he writes. Forrester recommends that customers should target an equivalent or lower total 10-year cost.
Some customers, Wang adds, have deferred their next purchase decision until after Jan. 1 2009, when the new maintenance fee kicks in. "These customers hope to gain leverage in the discounting and maintenance discussion, or on other issues such as SAP Business Information Warehouse (BW) credit toward Business Objects," Wang writes.
2. Demonstrate to SAP a Lower "Target Account Value." A time-honored tactic in vendor negotiations has been to set what's called spending expectations, which can reduce the pressure on both the salesperson and the customer. "Large customers should invest time convincing SAP that their 'target account value' is not reflective of a company’s growth rates or future SAP strategy or face a barrage of more unnecessary service offerings," Wang writes.
3. Assess Your Current Value for Support and Maintenance. This tactic may take some time but will be worth it. Wang advises business and IT folks who work with the SAP applications to conduct an internal audit to determine the number of support interactions during the past four years, support packages deployed, bug fixes deployed, and regulatory updates deployed. Then, he writes, take the total number of interactions and divide by the total amount spent on support and maintenance.
4. Quantify Unkept Promises. "Many customers chose SAP with the understanding that functionality gaps would be provided over time via enhancements that would be paid for by maintenance and support fees," Wang points out. "Customers should document a list of outstanding functional requirements and enhancements that have not been addressed, and work with other industry peers to drive a delivery commitment date from SAP."
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