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I see two elements of SAP's new two-tiered support plan that protect the company and stack the deck in favor of a higher-cost Enterprise contract.
I'm not as down on SAP as my colleague Bob Evans when it comes to the company's new two-tiered support plan. After all, SAP could have ignored the complaints and stood pat with a five-year plan to ramp up to Oracle support rates of 22% (a fee schedule that isn't uncommon in the industry). But I do see elements of the plan that protect the company and stack the deck in favor of the Enterprise Support choice.First, with SAP's new Standard Support option set at 18% (not much lower than the current Enterprise Support price), SAP doesn't have to scrap its financial plans and estimates for 2010 even if lots of customers switch to the more basic support level. SAP does have shareholders, after all, and its latest financial results wouldn't encourage any CEO to give away revenue and profits.
Second, SAP announced a one-year freeze on the Enterprise Support price at the 2009 level of 18.36%, it will be very tempting for customers to stand pat at the Enterprise level this year. If customers don't do anything by March 15, they'll be on the Enterprise Support step-up plan to 22% by 2016 (with increases resuming in 2011).
The prospect of getting Enterprise Support -- with its proactive monitoring and Solutions Manager software -- with discounts and predictable pricing over the next six years will appeal to many. Of course, customers can downgrade at any time, but if they make that move after March 15 and later decide Standard Support isn't good enough, they'll jump straight to 22%, having checked out of the step-up plan.
What do they say about slowly turning up the heat on frogs (or is it lobsters?) versus throwing them straight into the boiling water? The difference between 18% and 22% isn't quite that dramatic, but the analogy comes to mind.I see two elements of SAP's new two-tiered support plan that protect the company and stack the deck in favor of a higher-cost Enterprise contract.
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