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This months article on the IT industry aims at unveiling the IT major SAP's real motivation behind implementing an all new support policy. Quiet many times organizations face the issue of retaining their customers most organizations look for optimal changes in policies to drive retention goals.SAP has had a curious reputation of being one of the biggest Enterprise Applications organizations as well as one that had over 50% unsatisfied customers. Obviously the organization has come a long way from that.So much so that they announced their plans to move customers from their current agreements to the new service's pricing model of 22% of license fees by 2012. what do you expect from your application? high levels of availability and continuity? the flexiblity to quickly implement changes? To realize such expectations, you need an IT maintanence and support service that not only manages complexity, risks and costs but also acess to standards and best practices. So your IT and business process can pass through all hurdles, widespread escalations or just a technical fix SAP announced- it would transition its customers to its recently released and more expensive- enterprise support service as of Jan 1 2009 But to all the 350 customers who have signed up for the new service over the last six months its surely the time for them to pay. SAP fixes, But at what cost? Here is a taste of the service cost that will burn the pocket for any medium sized business: A customer paying 17% of license fee for standard support in 2008 will be paying 18.3% in Jan 2009 for the generous new support oferred by SAP SAP's enterprise support services has about 160 support offerings that go beyond bug fixes and upgrades to provide a "holistic offering" compared to the not so effective standard and premium support I got to wondering what if you were committed to the Enterprise Support Services and needed all the 160 support service to run your business properly? With an average increase of support service of $50 per user, per month multiplied by 160 support services offered (considering I need all the support from fault detection to fixes) the CFO needs to prepare to see the revised invoice. Sometimes a complaining customer is a good one,it is otherwise difficult to imagine how could any organization use that to its advantage and charge more for a task they should ideally be doing.In the Enterprise Application world obviously,changing a critical application or migrating is choosing between the devil and deep sea,unless there is a third party evaluation which can without bias help map business drivers to technical and strategic capabilities of new vendors. With global markets being effected by the recent developments,both in governance and economy,more and more companies are relying on improving their customer retention rates as means of insulating themselves against percieved turbulences.Unsure where the lines between revenue opportunity and a genuine concern for your customers are drawn at some enerprises. Sujay Subramanya Business Analyst- Emerging Markets Sujay works for ACG in the research and analysis division on industries like life science, manufacturing and information technology. He holds a dual bachelors degree in computer applications and business management. For a detailed report on his findings please fill up the insight section and we will be happy to reach out to you. |
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