SAP customers still see price hikes as raw deal

A new report published by analyst Forrester has put the spotlight yet again on SAP's maintenance price hikes.

It found frustration on the part of customers in reaction to the single-tiered 22 per cent maintenance model it introduced in July this year. But it advised customers to work harder to get the extra value the model offers, as well as not to be surprised if SAP's pricing becomes more like arch-rival, Oracle's.

"Forrester, and the SAP customers we have spoken with, concur that the SAP environment has increased in complexity, which inherently makes supporting the product more complex," the report said.

"But the more significant consequence of the increased complexity is that some SAP customers have decided to skip the upgrade to SAP ERP 6.0 and wait for SAP's next major release. Only 20 per cent of SAP's customers have made the move to SAP ERP 6.0."

Ray Wang, principle author of the report and Forrester analyst, continued: "Some would argue that SAP's maintenance hike to 22 per cent is just catching up with the competition, since Oracle has been charging 22 per cent since 2006. Oracle, however, typically provides more generous discounts on initial deals a practice SAP has not historically embraced."

In addition to the double whammy of higher licence costs and maintenance fees, the report cites frustration over the slow pace in completing functionality requests, potential upgrade fatigue' and support lock-in. In fact, of the 203 customers interviewed for the report, 85 per cent expressed minimal use of the existing basic support provision.

But the report argued that the recent pricing changes did offer some added value, such as the free trial period and graduated increase offers, upgrade commitments and testing and evaluation support.

The analyst also advised that the extension of maintenance for one year at 19 per cent for customers operating SAP R/3 4.6 and 4.7 should be used to decide whether to hold out on upgrading or to consider other long-term strategies such as instance consolidation or a technical upgrade.

There were also a number of tactics and options open to customers in the report that included demonstrating a lower account target value, fighting for more discounts, quantifying unkept development promises and perhaps looking at third-party maintenance options, as well as galvanising activity through user groups.