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August 1, 2008updated 19 Aug 2016 10:07am

SAP’s support price rise has industry in a quandary

I don't often post 'letters to the editor' I receive from vendors, because they are usually thinly veiled marketing exercises.Not so with one I just received about SAP's recent announcement that it is raising the real prices of its support

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I don’t often post ‘letters to the editor’ I receive from vendors, because they are usually thinly veiled marketing exercises.

Not so with one I just received about SAP’s recent announcement that it is raising the real prices of its support arrangements.

If you missed the news, SAP has announced it will transition all of its enterprise software customers to its recently introduced Enterprise Support maintenance offering, a move that will raise support prices for most of its 47,000 customers.

Beginning Jan. 1, 2009, and planned as a phased-in transition, SAP will shift existing customers to Enterprise Support, which carries an annual charge of 22% of net license fees. Most customers currently pay 17% of their license fees for support… [click continue reading for more on this entry]…Anyway, I thought this letter made some valid points:

“Sir,

At a time when purse strings are being pulled tight, SAP’s announcement that it is raising licence and support costs is not only bad news for software buyers, but the software industry as a whole.

Over the years, as service levels increase and upgrades take place, pricing changes are inevitable. However, many businesses are already suspicious of software vendors and what they perceive as being rigid and complex licensing models. Confusion breeds the suspicion that they are not always getting value for money. And all too often, this suspicion is borne out as customers pay for unused licences. When organisations are investing significant amounts on software licences every year, concern over the return on money spent is understandable.

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The only solution is for the software industry to get back to basics. Customers need to see a clear commitment to flexible and transparent licensing. This needs to be one in which customers can continue to be confident that they are only paying for what they use.

When nearly all IT departments are feeling the economic squeeze, those vendors showing a commitment to transparency will stand out from competitors, while challenging the industry’s negative image.”

Ansgar Dodt, Director – SafeNet

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