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TECH IT OUT BLOG | More SAP and Oracle customers know they have another option for support besides from their ERP vendor today, and many claim to be using that leverage to negotiate lower support contracts from their vendors, according to new survey results.
The takeaways from Constellation Research Group’s recent survey are a bit more nuanced than its headline-worthy data might lead you to believe. Ray Wang, principal analyst and CEO of Constellation Research, surveyed 149 Oracle and SAP customers. Constellation found that 80 percent of respondents had an awareness of the option of receiving maintenance and support from a provider other than their software vendor (in this case Oracle or SAP).
In turn, Wang reports that more than half (52 percent) of the respondents used a competitive proposal from a third-party maintenance provider in negotiating deals, and 62 percent “believed” that the negotiation tactic “improved negotiation leverage,” Wang writes.
But did it actually reduce their maintenance tabs? This is where things get tricky.
First, the research doesn’t segment the differences in survey results between the respective Oracle and SAP customer bases. That’s important because, as SAP has always maintained, it doesn’t discount its maintenance and support fees. (Earlier this year, one financial analyst claimed that a handful of SAP customers had negotiated discounts on maintenance with SAP, which SAP vehemently disputed.)
Wang’s research claims that competitive quotes led, in part, to reduced expenses in some licensing areas as well as in the price of customers’ overall maintenance and support deals. “For those customers choosing to remain with the software vendor for support, deeper conversations revealed reductions in maintenance fees ranging from 5 percent to 25 percent off Oracle and SAP prices,” Wang writes. “Respondents who secured a proposal from a third-party maintenance provider on average received a 13.7 percent discount on annual vendor maintenance fees.”
For the record, the third-party support providers today include Rimini Street, Spinnaker Support and CedarCrestone, and they typically promise customers “50 percent savings” on Oracle and SAP ERP customers’ annual maintenance and support fees.
As you might expect, Oracle and SAP execs are reluctant to discuss this subject, even though the sum total of all of the third-party support provider customer bases is a very small percentage of Oracle’s and SAP’s customer bases. (Wang’s survey base is an admittedly small sample size.)
There are, of course, well-known risks for companies that go the third-party route. Writes Forrester Research senior analyst Mark Bartrick in a 2012 report on third-party maintenance:
In the short term, risks can include missing out on new software releases or product innovation around such things as cloud and mobility. Over the longer term, clients staying on older versions of software will get further and further divorced from the latest software releases and associated functionality and may find it more challenging to then migrate to the latest release should they then choose to do so.
“SAP is about innovation, and that means helping customers increase their competitiveness and also achieve value through SAP solutions and support,” says James Dever, senior director of SAP corporate media relations. “And that’s the reason the vast majority of our customers choose Enterprise Support.”
One final statistic from the survey to note: More than 70 percent of those surveyed stayed with their software vendor.
As Courtney Bjorlin’s write-up of our ASUG Pulse Check survey on SAP Support states, “a sampling of SAP customers report that they are satisfied overall with the software support they’re receiving from SAP, but they have some big concerns about the quality of that support.” (See: ASUG Pulse Check: SAP Support Satisfaction.)