Monday, October 20, 2008
Vinnie Mirchandani continues to hammer away on his theme that software vendor maintenance fees represent "empty calories" in the IT budget. In a post today, he revisits SAP's recent hike in maintenance fees to 22% of the software license cost.
His basic argument is two-fold. First, SAP's contention--that customers will save on testing costs by using SAP's Solution Manager to apply new enhancements--is bogus. He writes:For a vendor which has made a ton of money selling Governance, Risk and Compliance the last few years, it is a naive statement at best. SAP is not the arbiter of what gets tested, in what regression sequence etc. There are plenty of auditors, quality assurance employees and outside experts who make that decision. And even if Leo is correct, it will take 3-4 years for early adopters to test the premise, share results before it is propagated across the customer base and there is material impact on TCO.Second, SAP should be lowering maintenance fees, not raising them.Then there is SAP's own cost base. They have offshored some of the support. There is more automation - more customers get self-service support answers through knowledge bases. Their community is handling many routine support questions (and customers are funding that community, not SAP). In the spirit of rollbacks, SAP support costs should have been declining for the last several years.Read Vinnie's entire post for more.
SAP knows that only too well. SAP offered Oracle customers cut-rate maintenance through its TomorrowNow unit, but steadfastly told its own customers they did not deserve a similar, low-touch offering.
Dennis Howlett also has an excellent analysis of co-CEO Leo Apotheker's TechEd keynote, which included defense of SAP's price hike. Needless to say, Dennis is not convinced.
SAP denies it is cutting spending on IT
SAP under the spotlight for "broken promises"
Mad as hell: backlash brewing against SAP maintenance fee hike