SAP Clients Reply on Support Price Hike

SAP (SAP) users have ordered the software company to meet a new set of criteria in order to justify the support price rises it originally proposed last year.

The SAP User Group Network has secured a deal by which SAP must meet a set of key performance indicators (KPIs) before it can increase support costs.

Chairman of the SAP UK and Ireland user group, Alan Bowling, told "Quite fundamentally, if [SAP] don't achieve the KPIs then they will be delaying price increases until such time as those KPIs are met."

"We've said, demonstrate the value and then people will be very relaxed with what they're paying for because they're getting something back for it," he added.

An example of the kind of thing that will be measured is how new releases and products can help reduce hardware or storage costs, for example, by cutting the number of CPUs a business needs. These will be benchmarked by a cross-section of SAP customers.

When the price rises were originally proposed in July 2008, the SAP UK and Ireland user group was vocal in opposing them but Bowling said he's now much happier with the situation.

"I suppose in simple English terms, it's really a case of the vendor putting their money where their mouth is and being absolutely certain that they're going to deliver value before they apply a price increase for maintenance, which is great."

SAP originally proposed to move all customers to its Enterprise Support package on 1 January 2009 with a price increase from 17 per cent of total licence cost to 22 per cent.

The company subsequently agreed to only raise support costs to 18.4 per cent of licence costs on 1 January with a more gradual increase to 22 per cent over the next four years.

This has now been extended further to seven years with maximum annual increase of 0.6 per cent subject to meeting the KPIs.

The results of the first set of KPI benchmarks are due in September this year with the subsequent price increases likely to take place in January 2010.

Before it's here, it's on the Bloomberg Terminal.