Enterprise System Spectator blog: ERP and enterprise system vendor evaluation, selection, and implementation.

The Enterprise System Spectator

Thursday, February 05, 2009

SAP and third-party maintenance: good for me but not for thee

This is rich. Ray Wang just wrote, on Twitter:
Hearing from SAP customers that there are new clauses that will force customers to commit to no Third Party Maintenance.
He then followed up with two more tweets:
Large ERP vendors requiring companies to confirm they are not receiving support services except from that vendor. More than 1 vendor.

Suggesting to customers not sign away any third party maintenance rights in new contracts. This is uncompetitive!
SAP's (and other vendors) audacity in this, if true, is at least three-fold:
  • SAP itself, until recently, has been delivering third-party maintenance for Oracle customers through SAP's TomorrowNow unit. So, apparently, SAP thinks third-party maintenance is a good idea when SAP does it for a competitor's products but not when others do it for SAP's products.

  • If SAP's maintenance and support offerings are such a great value, as SAP has been saying lately, why does it feel it needs to contractually bind its customers from using third-party maintenance?

  • Such contractual terms restrict fair competition. If a third-party maintenance provider is misappropriating a vendor's IP rights, as Oracle is accusing SAP of doing, SAP can legally pursue that service provider. Limiting the customer's choice is clearly against free market principles.
Many observers are concerned that the high-end ERP market is already a duopoly. Attempting to restrict fair competition in this way just confirms our worst fears about large vendors' intentions. I continue to believe that these actions should be investigated by the U.S. Department of Justice on the grounds of antitrust.

I thought SAP did a good job in its Business Suite 7 launch yesterday to position its products for the current economic climate. If what Ray wrote is true, SAP is making a big blunder and just lost whatever positive PR value it got from yesterday's event, in my book.

I would echo Ray's advice. Any prospects currently or soon-to-be in negotiations with SAP should be sure that they are not signing away their rights to use third parties in support of SAP products.

Lot's of chatter on Twitter about this as I write. I'll post updates as new information emerges.

Update: Dennis Howlett has a deeper analysis on why SAP may be feeling the need to restrict third-party maintenance. In a nutshell, the days of mega-software deals are over, and to maintain revenues it needs to transform into a service business. Third-party maintenance threatens that strategy. But read Dennis's entire post, as he has much more worth thinking about.

Update: James Governor points to an article in German indicating that the Swiss government is looking into possible actions by SAP to restrict competition. I'm relying on a Google translation of the article, however, and the cause of the inquiry is not entirely clear to me. Perhaps a German-speaker can help.

Update, Feb. 10. Ray Wang now gives more detailed information regarding software vendors attempting to restrict third-party maintenance rights, along with his recommendations for buyers.

Update, Feb 12. Just found this single post, referencing an SAP denial that it is attempting to use contracts to restrict customers from using third-party maintenance. However, there is no reference or link to a statement to this effect by SAP--just an assertion that SAP denies doing so. If any customers of SAP can shed light on this subject, let me now.

Related posts
SAP maintenance fees: where is the value?
SAP under the spotlight for "broken promises"
Mad as hell: backlash brewing against SAP maintenance fee hike
Oracle increases accusations in SAP lawsuit
SAP puts TomorrowNow out of its misery
Legal basis for third-party ERP support industry
Oracle wants to broaden lawsuit against SAP and TomorrowNow

by Frank Scavo, 2/05/2009 10:27:00 AM | permalink | e-mail this!

Subscribe!

 Reader Comments:

Post a Comment
 

Links to this post:


 

Powered by Blogger

(c) 2002-2014, Frank Scavo.

Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.

About the Enterprise System Spectator.

Frank Scavo Send tips, rumors, gossip, and feedback to Frank Scavo at .

I'm interested in hearing about best practices, lessons learned, horror stories, and case studies of success or failure.

Selecting a new enterprise system can be a difficult decision. My consulting firm, Strativa, offers assistance that is independent and unbiased. For information on how we can help your organization make and carry out these decisions, write to me.

For reprint or distribution rights for content published on the Spectator, please contact me.


Go to latest postings

Custom Search

Join over 1,700 subscribers on the Spectator email list!
Max. 1-2 times/month.
Easy one-click to unsubscribe anytime.

Follow me on Twitter
My RSS feed

AddThis Feed Button


Computer Economics
ERP Support Staffing Ratios
Outsourcing Statistics
IT Spending and Staffing Benchmarks
IT Staffing Ratios
IT Management Best Practices
Worldwide Technology Trends
IT Salary Report

Get these headlines on your site, free!


Awards

2013 Best ERP Writer - Winner

Alltop. We're kind of a big deal.
 
Constant Contact 2010 All Star Technobabble Top 100 Analyst Blogs


Blog Roll and Favorite Sites
Strativa: ERP software vendor evaluation, selection, and implementation consultants, California
StreetWolf: Digital creative studio specializing in web, mobile and social applications
Vinnie Mirchandani: The Deal Architect
Si Chen's Open Source Strategies
diginomica
CISO Handbook


Spectator Archives
May 2002
June 2002
July 2002
August 2002
September 2002
October 2002
November 2002
December 2002
January 2003
February 2003
March 2003
April 2003
May 2003
June 2003
July 2003
August 2003
September 2003
October 2003
November 2003
December 2003
January 2004
February 2004
March 2004
April 2004
May 2004
June 2004
July 2004
August 2004
September 2004
October 2004
November 2004
December 2004
January 2005
February 2005
March 2005
April 2005
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008
February 2008
March 2008
April 2008
May 2008
June 2008
July 2008
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010
April 2010
June 2010
July 2010
August 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011
April 2011
May 2011
July 2011
August 2011
September 2011
October 2011
November 2011
December 2011
January 2012
February 2012
March 2012
April 2012
May 2012
June 2012
July 2012
September 2012
October 2012
December 2012
January 2013
February 2013
March 2013
May 2013
June 2013
July 2013
September 2013
October 2013
December 2013
January 2014
February 2014
March 2014
April 2014
May 2014
June 2014
July 2014
August 2014
September 2014
Latest postings