SAP said Thursday that it would once again offer customers a choice of application support tiers, in a stunning reversal of a decision that had rankled many customers worldwide.
In 2008, SAP announced that customers would be transitioned to a fuller-featured but pricier Enterprise Support service. But Thursday, the company said a lower-priced Standard Support option would now also be offered.
SAP also said that a planned incremental price increase for existing Enterprise Support contracts would not occur this year.
Current Enterprise Support customers will have the option of moving down to Standard Support once their existing contracts expire, and vice versa.
Despite the return to a tiered support structure, SAP believes that Enterprise Support "remains the optimal choice for most customers," CEO Léo Apotheker said during a conference call.
Due to the changes, a benchmarking program SAP had formed with user group leaders to create KPIs (key performance indicators) for Enterprise Support is no longer necessary, Apotheker said.
"We will, of course, continue to monitor the efficiency of Enterprise Support, but as a formal program, [the KPI effort] will be discontinued," he said.
In a statement, SAP laid out the differences in features and pricing between Standard and Enterprise Support.
Standard Support will provide "legal updates, problem resolution, knowledge transfer and quality management to keep SAP systems running. Enterprise Support includes those features and also "focuses on business continuity, business process improvement, protection of investment and accelerated innovation, and reducing total cost of operations (TCO) of a customer’s IT landscape."
Standard Support customers will be charged at 18 percent of their software license base, with adjustments made each year according to inflation, beginning in 2011.
Enterprise Support's list price is 22 percent. Contracts signed up to July 5, 2008, are subject to a previously announced incremental price ramp-up, which will bring costs to 22 percent by 2016.
If Standard Support customers decide to move to Enterprise Support before March 15, their fees would be 18.36 percent this year and then follow the ramp-up path. But if they sign an Enterprise Support contract beyond that date, they would begin at 22 percent.
"By expanding its portfolio, SAP is offering the choice that customers expect,” Mike Stoko, chairman of the SAP User Group Executive Network (SUGEN), said in a statement.
Overall, SAP's decision was "a move they needed to make," said Forrester Research analyst Paul Hamerman. "[Enterprise Support] had become such a contentious issue over the past 18 months. It was really dragging them down in terms of their perception in the market."
Another observer had a different take.
"More than anything else, it was the direct response that SAP got from its customers," SAP analyst and consultant Helmuth Gümbel said in a blog post. "CIOs from SAP’s premium customer network gave feedback that is hard to print and by November, SAP was facing a certain maintenance income loss of over 200 million Euros for 2010. The list of accounts that SAP in an internal analysis marked as 'maintenance at risk' was long, much longer than anybody had expected."