User Group Hosting Discussions On SAP Price Hikes - InformationWeek

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User Group Hosting Discussions On SAP Price Hikes

SAP is holding firm on its plan to raise maintenance fees to 22% over the next four years, despite some customers' opposition to the plan.

SAP's U.S.-based users' group, Americas' SAP Users' Group, is taking on a mediator role to handle any gripes about SAP's recently announced plans to increase software maintenance fees. ASUG said Thursday that it would host panel discussions on the topic at two upcoming SAP user events in Nashville and Dallas.

SAP, meanwhile, is hosting ongoing Webinars on the somewhat controversial move.

But even as ASUG positions itself as a neutral party, it's largely sided with SAP's decision to transition customers over to a more comprehensive -- yet more expensive -- support service offering starting next year.

"It is true that no one likes rate increases, especially in these difficult economic times, but like everything else in life, these things do occur on occasion," Steve Strout, CEO of ASUG, said in a July 25 statement. Strout further defended SAP by noting it hadn't raised maintenance fees for 10 years.

By comparison, user groups for Germany and the United Kingdom/Ireland were initially critical of SAP's July announcement to increase prices, yet both have indicated they're having ongoing discussions with SAP on the topic.

Long-time SAP analyst Bruce Richardson of AMR Research is among the panelists expected to present an objective view of the situation at the Nashville event starting Sept. 15, which covers a variety of topics and is targeted at IT pros who implement operations-oriented applications, such as CRM and supply chain management. Panelists at the Dallas event, starting Oct. 20 and targeted at IT and business users of SAP's Business Objects and government compliance software offerings, include two SAP customers, Cisco and agricultural company Monsanto.

The panels are part of ASUG's plan to let users "have the ability to ask questions specific to their own organizational concerns directly of the appropriate people within SAP, as well as opportunities to offer alternative ideas," Strout said.

SAP announced July 16 that it's eliminating its existing support offerings and replacing them with a new offering, SAP Enterprise Support. As a part of that change, companies that were paying a 17% maintenance fee on software licenses for SAP Standard Support this year will pay an 18.3% rate next year. The fees will increase 8% per year to cap at 22% by 2012.

"SAP's initial program had it adjust in 2009 to 22%, but ASUG was able to convince SAP that this was not in the best interest of our members," Strout noted in an e-mail to InformationWeek on Thursday. Strout, formerly CIO at Morris Communications, became ASUG's first full-time employee when he took on the CEO role last year.

It's clear SAP has no plans to back down on the price increase. Rather, it's looking to gain support for the increases by better marketing of the SAP Enterprise Support program. A Webinar on Aug. 19 intended to demonstrate the value of the SAP Enterprise Support program with "specific focus on innovation and protection of investment in SAP." A Sept. 24 Webinar reviews such program features as continuous quality checks, service level agreements, and 24/7 root cause analysis. An Oct. 16 Webinar covers the global support aspect of the service, and a Nov. 12 Webinar is intended to help customers "overcome issues and keep projects on schedule and systems online."

Strout said in a July statement that it is ASUG's responsibility to "ensure that we hold SAP to what they say: companies should see a benefit" from the new services program.

This story was edited on Aug. 29 to correct the name of AMR Research analyst Bruce Richardson.

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