After months of tough negotiation, the various SAP user groups and SAP buried the hatchet and finally came to an agreement.

As InfoWorld reported: “SAP has ceded to pressure from user groups and agreed to slow the rate at which it applies a new tariff for software support.” The price of maintenance is thus set at 22% of the software license price, compared to the 17% it was previously. This is in accordance with what the German vendor had planned before users revolted. However, this increase will not take full effect before 2015 for current customers – the cost of support will go up 3.1% annually, rather than an immediate 8%. New clients will be charged 22% as soon as they sign the contract.

In exchange, SAP agreed to jointly develop KPI benchmarking in order to measure the value of Enterprise Support (business continuity, business process improvement, protection of investment and total cost of operations) and to delay future increases until these targets are met.

Some negotiating!

This is clearly an abuse of dominant position. SAP is ultimately imposing its will on users while making a few concessions that are still somewhat vague. The user groups agreed that while the deal isn’t perfect the Group is satisfied that the vendor “listened” to its customers and backed off the maintenance fee.

In a very challenging time for IT users, SAP is taking the same sort of major risk that Microsoft took with Software Assurance, which launched the first big move toward open source deployment! Competition is increasing and even if existing users comply – one way or another – with these new conditions, I’m not sure that new customers will be ready to do so.

This could turn out to be a trump card for open source vendors. First, this negotiation (or shall we just call it haggling) erodes user confidence. Second, maintenance fees for open source solutions aren’t calculated the same way and, with no license fee, the open source alternative is far less expensive than a proprietary solution. And, finally, with free access to the source code, users can easily personalize their systems and at much less expense than contracting with SAP’s expert consultants.

Today, companies have many ways of freeing themselves from this sort of practice: Open Source ERP (Openbravo, OpenERP, ERP 5, Compiere), Open Source CRM applications (SugarCRM, SplendidCRM, CentraView) or Open Source Business Intelligence (Talend, SpagoBI, Jaspersoft, Pentaho, etc). And more and more enterprises are taking the plunge. The world is changing, but it seems that big companies like SAP are deaf or blind. Some customers may have the same disabilities, but I’m betting that they’re not in the majority.

Bertrand