I’d like to share a recent discussion that I had with Martin Schindler, Editor of Silicon.de
Martin Schindler: There are experts who talk of a non-existing market when it comes to SAP third party maintenance. Is that correct?
Stefan Ried: You could have the impression, especially for Germany, because companies remain very close to SAP and many have decided for a Single-Vendor-Strategy. But in other countries it is much less the case. However the price politics of SAP in the last year and now the slow innovation speed has raised the discussion of alternative maintenance model again.
Martin Schindler: Are there German users with real interest in obtaining maintenance for their SAP system through another company?
Stefan Ried: Yes, there is definitely interest.
We regularly make, and particularly in the last year, sample calculations for users (as well as for system integrators) if it is worth going for third-party maintenance. It depends on various factors, whether it is worth it.
Martin Schindler: What do these factors look like?
Stefan Ried: Companies must check, for example, how much “know-how” exists in-house. Third-party maintenance can work very well, if not everything from SAP-Maintenance is needed. This is for example the case, when parts of the SAP-System are regarded as frozen, small legal changes follow, or to repair a bug. With this technical problems, compatibility with operating system patches, performance problems within an established system can be addressed and the system can operate securely with very little change. So, third-party maintenance vendors can, especially for older SAP systems, work very well.
Martin Schindler: When is third party maintenance not suitable?
Stefan Ried: There is the important question: “Where do I stand in the product lifecycle?” You must pay attention that you do not receive the same from a third party vendor, as you would from SAP. If you really need everything that you receive from SAP maintenance, then there is no alternative.
Martin Schindler: Can third-party maintenance also turn out more expensive than the stipulated price from SAP of 18-22% of the license price?
Stefan Ried: When it comes to getting the maximum out of the bought system, how the Americans say, to leverage, then it is possibly by a third party vendor more expensive. I give an example: A company buys a CRM system and begins in the first year with sales order management. Then in the next quarter lead management is added, finally envisioning that the company wants lead qualification. After half a year it is decided to also use the campaign management. In tighter times many users implement their SAP system step by step.
Martin Schindler: But what is the problem here?
Stefan Ried: If you are in such a mode, then the third party maintenance does not work very well. Because a part of the contract for third party maintenance is an exact whole evaluation of which program parts, modules or transactions one uses. Only these will also be serviced from the vendor at the level desired. Therefore these offers are absolutely viable.
If you can also not say today, what you will need in the next year, then the alternative maintenance vendor is perhaps to your disadvantage. This is one of the most important distinctions between the maintenance from original software producers and what is delivered from a third party.
Martin Schindler: How far do companies support offers differ from SAP and third parties?
Stefan Ried: The extensive SAP enterprise support is not comparable in size with the third party vendors. It is rather a
small SAP standard support, which is now offered again due to urging user groups. The offers are only comparable for people who have no evolution in their SAP system, who perhaps have relatively old SAP systems and do not even want to change it. New developments are found in platforms outside the SAP environment, around portals or in SaaS applications or in the Office environment.
Martin Schindler: Not every department has the same infrastructure and application environment. Are such contracts always valid company-wide?
Stefan Ried: You can of course split such maintenance contracts in enterprises. Siemens has, for example, one of the largest SAP-HR systems. At the same time, they use SuccessFactors for talent management, a SaaS application. Siemens gets the innovation parts from SuccessFactors, while the traditional HR area stays more or less constant. Here you can freeze processes and could negotiate third party support. In enterprises you can therefore cover different parts of the process landscape with different maintenance levels.
Read next week which vendors offer Thirdparty maintenance and what does it mean for vendors that like to move into this business.
Also check out recent research by Paul Hamerman and Duncan Jones on Forrester.com
Read Part Two
Translated and condensed by Charles Green. Part one of two.