R "Ray" Wang
R "Ray" Wang
Tuesday's Tip: Act Now To Leave The Door Open For SAP Third Party Maintenance Options
The Real Deadline To Consider Third Party SAP Maintenance Is September 30th
In conversations with hundreds of SAP customers, many have not realized that they must act now in the next 30 to 45 days if they want to move off of SAP customer specific maintenance from extended maintenance for older products. Despite the support window ending in March 2013 for extended maintenance, SAP is requiring organizations to serve notice by September 30th, 2012 (see Figure 1). Key products impacted by this deadline include:
- SAP ERP 2004 (ECC 5.0)
- SAP NetWeaver 7.0
- SAP CRM 6.0
- SAP SCM 5.1
- SAP SRM 6.0
- SAP SRM 5.0
- SAP CRM 5.0
- SAP SCM 5.0
- SAP Netweaver 2004
- SAP SRM 4.0
- SAP SCM 4.1
- SAP R/3 Enterprise (4.7)
- SAP R/3 4.6C
In past experiences, SAP has taken a hard line on the notification date and customers need to immediately take action should they wish to have the maximum support options available to them.
To be clear, those on SAP's Business Suite 7 have a longer maintenance support window (see Figure 2.) Those products will be supported with mainstream maintenance until 2020.
Figure 1. SAP Maintenance Strategy and Support Time Lines For Older Releases (2010) Revised With 2012 Version
Figure 2. SAP Business Suite 7 Innovation Road Map Provides Longer Maintenance Until 2020
Customer Specific Maintenance Comes With Many Disadvantages
While SAP will tout many benefits of Customer Specific Maintenance, most customers can expect the following downsides:
Increase to 22% support fees*Same rate as existing maintenance program with no lower rate*- No new tax and regulatory updates
- No new fixes
- No new support packages
- No direct upgrade path for new releases
- No SLA's for service and support
The benefits of the increase in support fees for most customers do not justify the benefits delivered by SAP maintenance.
*(Updated August 30, 2012)
Constellation was approached by SAP on this issue and was given an official response from SAP on a few key questions:
- Can SAP Standard Support Customers Remain at the 18% in Customer Specific Maintenance? Customers who remained as an SAP Standard Support customer at the 18% price point, carry on to 18% in customer specific maintenance
- Can an SAP Enterprise Support Customer downgrade to Standard Support in Customer Specific Maintenance? Customers with SAP Enterprise Support at the 22% price point can downgrade to the SAP Standard Support at 18% for all products and releases that the customer owns and not just the ones moving into customer specific maintenance
- Are there any lower maintenance rates than the existing maintenance rates a customer pays today when they go to customer specific? Customers pay their rate based on the maintenance program. The only exception would be for a Standard Support customer who has elected to receive extended maintenance for a specific release. In this case, they would pay a 4% uplift on top of their 18% during the extended maintenance period. the uplift only applies ot the release they are covering with extended maintenance. When the extended maintenance period for the particular release ends, the 4% uplift also ends and the release transitions to customer specific maintenance at the Standards Support price point of 18%
The Bottom Line: Give Notice, Leave Your Options Open.
In numerous advisories and inquires with SAP customers, Constellation recommends that all customers with the impacted products give notice before the September 30th deadline for four key reasons:
- Explore third party maintenance. Filing notice allows organizations to consider and evaluate third party maintenance providers. Arrange for a meeting or appointment right away to assess your current scenario. See how vendors are providing tax and regulatory updates and improving the operational efficiency of legacy applications.
- Improve negotiating leverage for 2013 maintenance contracts. Use the third party maintenance option discussion to create leverage in contract negotiations. Take the time to negotiate credits for shelfware, park licenses, or plan upgrade paths.
- Avoid bundling of contracts. Keep existing contracts separate. Resist the temptation to consolidate contracts. Consolidation means you can't renegotiate licenses in increments. Consolidation also eliminates options to sell your used SAP software in europe for credit.
- Stop playing contract support window games. Most customers face endless negotiation cycles that just pushes the issue into the future. Every day a company is not on third party maintenance, is money wasted for stable products.
Your POV.
Need help with your SAP software contract? Contact us throughout the vendor selection process. We can help with a quick contract review or even the complete vendor selection. We provide fix-fee and gain sharing arrangements. We can also help you with your third party maintenance provider evaluation.
Let us know your experiences. Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.
Related Constellation Research
Wang, R. "Best Practices – Three Simple Software Maintenance Strategies That Can Save You Millions" Constellation Research, Inc. March 8, 2012
Scavo, Frank & Wang, R. “Big Idea: Constellation’s Business Value Framework” Constellation Research, Inc. January 31, 2012.
Wang, R. “Best Practices: Why Every CIO Should Consider Third-Party Maintenance.” Constellation Research, Inc. August 7, 2012.
Wang, R. “Market Overview: The Market For SAP Optimization Options” Constellation Research, Inc. May 11, 2011.
Wang, R. “Best Practices: The Case for Two-Tier ERP Deployments” Constellation Research, Inc. February 28, 2011.
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