what do you want to know

what do you want to know

In a letter to customers, SAP announced that it will increase maintenance fees by up to 3.3% due to changes in the macroeconomic environment of higher inflation rates reflected in regional price indices.

Due to higher energy and labor costs, as well as rising costs for third-party services, SAP said it has decided to adjust support fees for existing support contracts for SAP Standard Support, SAP Enterprise Support and SAP Product Support for Large Enterprise. in the corresponding local Consumer Price Index (CPI).

“In line with standard business practices worldwide, our contract terms allow for annual adjustments to support fees after the initial term and the first renewal term. Consistent with the terms of our agreement, SAP will moderate the annual support fee for the aforementioned SAP support agreement at a maximum of 3.3% (or the local CPI rate, if lower), effective January 1, 2023.”

The company noted that this upcoming increase will be the first time in nearly a decade that it has been required to adjust maintenance fees, having held support prices steady for the past 10 years, including waiving adjustments during the pandemic.

SAP said this increase does not represent a list price increase for SAP support offers for new purchases of software. “SAP is engaged in an open dialogue with our customers and user groups to offer the right support for their needs, for predictable business conditions. Transparency is important to SAP in its relationship with customers, and SAP will always strive to maintain a dialogue around important areas such as support,” it said. said in a statement.

Liz Herbert, principal analyst at Forrester, said the changes highlight the importance of sound Contract revision At the time of signing or renewing the contract. “While the maintenance fee has been stagnant for a long time, it’s a reminder to make sure your contract protects you in times like this and you won’t be surprised,” he added.

Looking at how affected SAP users should move forward, Herbert said: “In terms of what you can do about the fees yourself, it may be time to renew stalled conversations about migrating from SAP or the competition to the cloud. Many firms are moving to the cloud for better agility and A more modern application environment built for real-time decisions and AI.”

In Herbert’s experience, SAP has historically been favorable contract negotiation When its customers take steps to stay with SAP by turning off their old software. “If you decide to look at competing products, they may also behave favorably because they have a major desire to win business away from SAP. You can consider third-party maintenance from a company like Rimini Street, which typically offers a 50% discount on maintenance fees.”

However, third-party support, such as that offered by Rimini Street, means companies choosing this option are cut off from future SAP enhancements, Herbert warns. However, he said using a third-party enterprise software provider offers a way to keep a current product running with no mandatory regulatory fixes.

“You can give up ownership of existing licenses and thus reduce maintenance, although this can be a difficult option in practice,” he added.

“Furthermore, most customers can save costs and optimize in many other ways, and so use this announcement as a catalyst to look more broadly at all costs. This is a good time to look at infrastructure/cloud, support resources, off-the-shelf and redundant systems. Now is a good time to look at whether outsourcing or automation can create more efficiency and potentially create a better experience for the business.

As Herbert points out, Third party support Offers existing SAP customers a way to avoid price increases in maintenance fees. Rimini Street is likely to be one provider set to benefit from SAP’s plans

Discussing the SAP statement, Emanuele Hoss, general manager of Europe, Middle East and Africa (EMEA) at Rimini Street, said: “This is not news that SAP customers want to hear, especially in the current economic climate. At a time when they are committed to their long-term commitment to SAP. Under pressure to make an investment decision, thanks to the vendor planning a complete shutdown Support for ECC By 2027, customers will need the financial flexibility and time to plan as much as possible.”

Hoss said SAP users need to consider how they build an ERP environment that is scalable and agile, which means unpicking highly customized existing systems.

“SAP customers really need to evaluate whether going to S/4 HANA is even the right path. Given so much IT budget is dedicated to keeping the lights on, rising support costs are going to mean fewer resources are available to unpick such complex ERP systems,” he said. said

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