December 21, 2009
As SAP shows 'clear path forward,' some users look to stay behind
CAMBRIDGE, Mass. -- While SAP was demonstrating a "Clear Path Forward" at its annual Influencer's Event in Boston this week, revealing product roadmaps and market strategy to press and analysts, a group of customers and competitors gathered across the river to focus on staying right where they are with their SAP implementation.
Many of the addresses at the Sapience event were prefaced by speakers assuring an audience of about 100 that this was not an anti-SAP event but rather a way to get the most out of the existing investments made in SAP. Yet there was plenty of criticism of the applications giant to go around.
"If you add the cost of the license, maintenance, implementation, upgrade, testing every time you did the upgrade and training individuals for new modules [in an SAP project], I would wager it would be cheaper to have done it with custom development," said Ray Wang, partner with the Altimeter Group, in his address at the event. "That is pretty scary. We're now in a sunk-cost theory proposition. What do we want from SAP? To deliver on the product roadmap you promised the first time. Let us take the savings to go develop something more innovative."
Vinnie Mirchandani, founder of the Deal Architect, likened SAP to Star Wars' Han Solo -- frozen in carbonite and despite investments of an estimated $2 trillion in the SAP ecosystem over the past 25 years, showing little innovation. SAP touts the SAP Developer Network (SDN), Mirchandani said, with SAP professionals and consultants blogging, sharing best practices and, in some cases, answering questions for one another that otherwise would have gone to SAP support. But if the SAP community is now handling first-tier support questions, why haven't the savings been passed on to customers. In fact, he said, SAP is more interested in reducing maintenance costs for Oracle customers than its own, acquiring a company that provided third-party maintenance for PeopleSoft, JD Edwards and Siebel applications.
"They bought TomorrowNow," he said. "They understand third-party maintenance. They made a conscious effort to offer Oracle customers a choice -- but not for their customers."
Much of the backlash at SAP came as a result of the company's decision to roll out Enterprise Support, a new maintenance and support program that will eliminate its lower-cost option that charged 17% of maintenance fees and will ultimately bring it to 22%. That was roughly six months before the global recession hit.
"Our announcement was at an unfortunate time," said Janet Wood, head of SAP's support division, in an interview at the Influencer's Summit. "Even though there are companies that have costs higher than [ours], we continue to get publicity around it."
Indeed, Mike Masters, director of global IT application solutions for Goss International, a Bolingbook, Ill.-based manufacturer of printing presses, was attending the Sapience event because his company is considering moving from SAP maintenance to Rimini Street, a third-party maintenance provider, once it upgrades from R/3 4.7 to SAP 6.0.
"Everybody's looking to save," Masters said. "SAP raised their [maintenance] prices to 22%, and six months later the recession hit. There are other areas within our organization that could use the influx of more cash instead of 22% of my license fees."
While at the Influencer Summit, SAP executives mentioned multiple times that SAP does not need, nor want, to own the entire technology stack the way rival Oracle is positioning to do, combining its applications and database with hardware from potential acquisition Sun. The world is moving away from single software suites, said Helmuth Gümbel, founder and managing partner of Strategy Partners International, the host of Sapience.
"[One] architectural shift is we are outgrowing proprietarily integrated software suites," Gümbel said. "Please don't ask me to make an acronym out of this term."
Many of the addresses at the Sapience event were prefaced by speakers assuring an audience of about 100 that this was not an anti-SAP event but rather a way to get the most out of the existing investments made in SAP. Yet there was plenty of criticism of the applications giant to go around.
"If you add the cost of the license, maintenance, implementation, upgrade, testing every time you did the upgrade and training individuals for new modules [in an SAP project], I would wager it would be cheaper to have done it with custom development," said Ray Wang, partner with the Altimeter Group, in his address at the event. "That is pretty scary. We're now in a sunk-cost theory proposition. What do we want from SAP? To deliver on the product roadmap you promised the first time. Let us take the savings to go develop something more innovative."
Vinnie Mirchandani, founder of the Deal Architect, likened SAP to Star Wars' Han Solo -- frozen in carbonite and despite investments of an estimated $2 trillion in the SAP ecosystem over the past 25 years, showing little innovation. SAP touts the SAP Developer Network (SDN), Mirchandani said, with SAP professionals and consultants blogging, sharing best practices and, in some cases, answering questions for one another that otherwise would have gone to SAP support. But if the SAP community is now handling first-tier support questions, why haven't the savings been passed on to customers. In fact, he said, SAP is more interested in reducing maintenance costs for Oracle customers than its own, acquiring a company that provided third-party maintenance for PeopleSoft, JD Edwards and Siebel applications.
"They bought TomorrowNow," he said. "They understand third-party maintenance. They made a conscious effort to offer Oracle customers a choice -- but not for their customers."
Much of the backlash at SAP came as a result of the company's decision to roll out Enterprise Support, a new maintenance and support program that will eliminate its lower-cost option that charged 17% of maintenance fees and will ultimately bring it to 22%. That was roughly six months before the global recession hit.
"Our announcement was at an unfortunate time," said Janet Wood, head of SAP's support division, in an interview at the Influencer's Summit. "Even though there are companies that have costs higher than [ours], we continue to get publicity around it."
Indeed, Mike Masters, director of global IT application solutions for Goss International, a Bolingbook, Ill.-based manufacturer of printing presses, was attending the Sapience event because his company is considering moving from SAP maintenance to Rimini Street, a third-party maintenance provider, once it upgrades from R/3 4.7 to SAP 6.0.
"Everybody's looking to save," Masters said. "SAP raised their [maintenance] prices to 22%, and six months later the recession hit. There are other areas within our organization that could use the influx of more cash instead of 22% of my license fees."
While at the Influencer Summit, SAP executives mentioned multiple times that SAP does not need, nor want, to own the entire technology stack the way rival Oracle is positioning to do, combining its applications and database with hardware from potential acquisition Sun. The world is moving away from single software suites, said Helmuth Gümbel, founder and managing partner of Strategy Partners International, the host of Sapience.
"[One] architectural shift is we are outgrowing proprietarily integrated software suites," Gümbel said. "Please don't ask me to make an acronym out of this term."