SAP: “We made a mistake”

Bill Wohl, Vice President, Field Communications SAP, spoke with me today to clarify the price issues I raised yesterday. According to Wohl, there were specific legal issues in Germany and Austria. These required the company to tear up the existing contract and issue afresh so that it could impose the price increase. Wohl said this created an emotional response from the German and Austrian customers: “They saw it as a breach of trust and that’s something we had to fix.”

SAP now says it is giving those customers choice whether it takes up the new enterprise support offering or sticks with existing - at least for the next year or so. However, Wohl warns that most existing contracts allow for a cost increase that may see some support costs rising to 21% rather than the 19.3% if they take enterprise support. “It’s clear we made a mistake in the way in which we communicated the manner in which we needed to legally take this step and we’re now trying to fix it. We are giving them choice but they need to evaluate the best option for themselves.”

However, Wohl is clear this is an exception that will not apply to other territories. Even so, it will create a complex environment for multi-national companies that have different contracts signed in different countries. These will be faced with multi-step cost increases. It also means a multi-national that has signed its contract in Germany will be able to take global advantage of the new arrangements.

As I said to Wohl, SAP is running the risk of building up resentment for the future. That opens the door for consideration of alternate offerings. Wohl says the company is not noticing any change in the commitment existing customers are making to SAP solutions. He also pointed out that different markets display different conditions and cultures. That may be true but resentment is a common issue and potentially dangerous to future business. Wohl conceded that some spending may be deferred, although he attributed that more to economic conditions than any competitive issues.

Wohl was keen to stress that SAP is not seeing the levels of unrest I am seeing among the customer base. That doesn’t surprise me. Customers often do not feel they have the power to tough it out with their software suppliers, relying instead on their user groups to do the fighting for them. It is however telling that SAP recently agreed with SUGEN that they will jointly develop KPIs against which enterprise support and the price rise will be evaluated.