Enterprise software support is a multi-billion dollar source of revenue for SAP and other ERP software vendors with operating margins as high as 95 percent for some companies. Software vendors have been known to aggressively protect this revenue stream and dissuade customers from exploring third-party support alternatives.
As you evaluate if third-party support is right for you, it's important to separate enterprise software support myths from reality.
Myth #1: SAP Is Your Only Source for Support for Your SAP Software
Once upon a time, this was true. But for about a decade, third-party support has been a compelling option offering SAP customers a choice of maintenance providers.
Average cost reduction of 75 percent in overall vendor maintenance spend is the principal reason why hundreds of SAP licensees engage with third-party support providers. Beyond cost savings, those organizations also report that they experience more comprehensive and responsive support with third-party support than they did with SAP.
For instance, third-party support from Rimini Street supports customizations and interoperability tuning not traditionally covered by SAP as part of its support offerings, backed by an assigned primary support engineer with an average of 15 years of hands-on experience with the product line. For licensees, that's a welcome change from SAP's more standard break/fix support offerings, and the need to "start at the bottom" with a junior-level engineer to resolve an issue.
Myth #2: New SAP Releases Are Important for New Functionality
In the early years of enterprise applications, new releases from SAP and other software vendors contained new and innovative features and capabilities. That's changed in the view of some customers in the last decade with minimal innovation back into core product and seemingly all investments directed towards the cloud.
For example, SAP is increasingly focusing its resources on S/4HANA, leaving the Business Suite roadmap with little more than annual Enhancement Pack updates that contain incremental tweaks to existing functionality with what many SAP customers believe are minimal to no "must-have" new features.
Rather than wait and hope for the best with the yet unproven and potentially expensive S/4HANA, CIOs are taking the reins of innovation by deploying new cloud, mobile and big data technologies, typically around robust and stable SAP Business Suite core in a hybrid IT configuration. This innovate-around-the-edges strategy with best-of-breed solutions is driving their current business agility and transformation today.
A key funding source for those innovations is the total savings liberated by ending costly SAP support contracts in favor of a third-party support provider.
Myth #3: You Must Upgrade to Stay Supported
For many years, some companies felt compelled to upgrade simply to stay on an SAP-supported application, not because they identified a solid business case or ROI.
With third-party support, organizations can avoid SAP upgrades that they neither want nor need to stay on support while benefiting from more responsive and less costly support, including important tax, legal and regulatory updates, and additional services, interoperability and roadmap services as examples.
It's a critical consideration as many licensees find themselves at a crossroads as SAP intensifies its push for S/4HANA. For now, most organizations are reluctant to undertake a potentially costly and risky reimplementation around S/4HANA. Corroborating this fact is a recent Rimini Street survey of SAP licensees which found that 89 percent plan to continue running Business Suite platforms ranging from R/3 or earlier up through ECC 6, with 57 percent seeing no compelling stand-alone business case for S/4HANA.
Myth #4: You Can Never Do Business with SAP Again Once You Move to Third-Party Support
The sales reps or maintenance renewal reps at the various ERP software vendors sometimes try to scare their licensees from leaving maintenance by threatening or implying that no new products or users will be licensed to the customer. The customer may also end up believing that any new licenses, if allowed, would be priced at unfavorable rates.
The reality is third-party support clients can typically continue to license and roll out new products, and there are many examples of this now. Leaving SAP support turns your organization into a prospect all over again. Choice means more negotiating leverage and a better bargaining position for you, the customer.
Assessing the ROI of Third-Party Support for SAP Applications
This in-depth ROI analysis of 65 Rimini Street clients can help organizations understand the business case for switching to third-party support. Nucleus Research, an independent analyst firm, has validated the findings in this report.
Hari Candadai, GVP, Global Product Marketing and Strategy
Mr. Candadai is a seasoned marketing professional with over 22 years’ experience in global product marketing and corporate marketing management. He has consistently demonstrated his leadership by building strong customer relationships and optimal cross-functional partnerships. The author of several thought-leading white papers on disruptive software and services models, and one of the chief evangelists for independent support, Mr. Candadai is a frequent speaker at industry conferences globally.