Enterprises using SAP R/3 have been given an extra year to decide whether to upgrade to the latest version of the ERP system.
Buried deep in the announcement of last month’s controversial increase in SAP’s maintenance charges, was news that the software giant was prolonging the period of extended maintenance its offers for customers operating R/3 4.6 and 4.7 platforms.
SAP has traditionally offered a “5-1-2” maintenance schedule, five years of normal maintenance at 17 percent of licence fee, followed by one year extended maintenance at a 19 percent and a further two years at 21 percent of the licence fee.
SAP said, “This added period of one year makes the move to SAP Enterprise Support cost-neutral as customers plan their transition to SAP ERP from SAP R/3.”
The move has met a mixed reaction from SAP users, analysts and consulting firms.
Forrester analyst Ray Wang said the move “may appear cost neutral from SAP's point of view, but when you include the relicensing fee to go from R/3 4.X to ERP 6.0, it is definitely not cost neutral for those customers happy with their existing version. Having one extra year is nice for some clients who do not want to make the move yet,” he added.
David Long, chief executive of West Trax, which provides consulting and optimisation services for SAP users, urged organisations to re-assess their upgrade plans in the light of the extension of support for Releases 4.6 and 4.7.
“Increased SAP support charges can be offset by eliminating all unnecessary custom code support costs,” said Long.
West Trax has accumulated data from the analysis of 830 production systems. “The results indicate that over 90 percent of SAP systems have the potential to make major support cost savings by eliminating or replacing custom code,” said Long.
Some UK SAP users are already slowing their plans to upgrade from R/3 to take advantage of the extended maintenance offer from the supplier.
However others, frustrated by what they see as an unfair price rise in SAP’s maintenance have said that they see the year extension as SAP buying time for its sales team to push upgrades on users and to extract revenue from organisations that would have gone elsewhere for support.
Forrester’s Wang was not convinced this was the driving force behind SAP’s little publicised move. “This may be viewed as a delaying tactic,” he said but the key issues for end users are:
- How many SAP customers have yet to upgrade to the new version of the platform.
- The future road map of SAP’s ERP 6.0 flagship product.
- Whether businesses are getting value for money from their SAP maintenance agreements.
“We have many clients who do not see the value of moving to the next release. That means there are thousands of major enterprise customers who will be happy because they now have an extra year to think about their upgrade strategy,” said Wang.
Like Long, he urged SAP users to use this extra year to carry out a wholesale review of their implementations and their use of support.
“SAP does offer a lot of support in its maintenance packages, but users have to ask themselves how much use have you made of it? How many calls have you made? How many upgrades have you installed? How much of the functionality you were promised by the sales people is still outstanding?”
Wang suggested that SAP should introduce a tiered pricing structure for its maintenance contracts, allowing end users to pick the level of support, and hence the price that was most appropriate to their organisation.