More details have emerged on the actual 10 or 11 KPI’s that SUGEN and SAP have agreed to as well as the SAP’s targets for showing value. To start with, here are the main KPI’s for each category:
SUGEN KPI’S
Business Continuity
- Increased business solution availability
- Reduced amount of work related to all SAP incidents (including reduced mean time to resolve and reduced overall SAP incidents)
Business Process Performance
- Reduced number of emergency changes.
- Reduced amount of work for post-go-live stabilization and optimization.
- Reduced number of failed changes, which must be backed out of business solutions in productive use.
Protection of Investment
- Deployment of the latest innovation for application and technology stacks.
- Reduced maintenance costs by elimination of unnecessary modifications.
Total Cost of Operations:
- Decreased hardware costs (e.g. CPU).
- Decreased storage costs.
- Reduced total work of deploying support and enhancement packages.
Approach shows rigor in the cost justification and value process
According to user group members, measurements will be conducted quarterly with the first one occurring in every six months. SAP must also show the following in order to prove value:
- Demonstrate tangible cumulative cost savings for customers exceeding the increase in support fees
- Prove KPI index decrease by 30 percent within the next four years, aggregated over the100 customers participating in the benchmark program
- Use cumulative savings over the four years using a pre-define schedule of four percent in 2009, 12 percent in 2010, 22 percent in 2011, reaching the full 30 percent by 2012
The bottom line – user groups should now determine the minimum R&D percentage of investment from revenues
The SUGEN KPI’s provide a great framework for other user groups to begin a discussion on the value of the new SAP Enterprise Support offering in comparison to today’s programs. Keep in mind, these are only useful when vendors must justify a maintenance fee increase. The bigger and more important issue – how are the maintenance revenues reinvested? Consequently, users should begin to track the ratio of R&D dollars that tie back to the amount of maintenance revenue. This will be key issue for the next 5 to 10 years.
Your POV
Do you think SAP met its promise to SUGEN? Will this help you with your commitment to SAP? Do you feel SAP has now done the right thing? Send me a private email to rwang0 at gmail dot com. Posts are preferred! Thanks and looking forward to your POV!
Copyright © 2009 R Wang. All rights reserved.
11 Comments »
Ray, From the press release issued yesterday it was not clear to me how the KPIs affect the maintenance increase. In the third paragraph of the PR, SAP says “SAP has agreed to postpone the subsequent price increase schedule until the targeted improvements measured by the SUGEN KPI Index are met.” Then later they describe the modifications they’ve made to the support pricing program (e.g. extending the timeframe by three years). It is not clear whether or not the mainenance hike is being delayed until the KPIs are proven. Do you have a take on this?
Ryan – It’s very clear. Failure to deliver the agreed improvements to the KPI’s and the SUGEN Index will result in a delay to the next price increase until the SUGEN Index improvement is reached.
Incidentally the benchmark group companies are being selected by SUGEN against a framework of size of comapnay and regions across the globe.
Alan – With all due respect, the policy is far from clear and I would dearly appreciate your insight. If you are so inclined, please email me at ryan at wedgepartners dot com .
The KPIs open up an interesting situation. The measurements and their parameters will differ by industry vertical. Taking this forward, the maintenance fee will have to be structured differently for different industries.
Prashant Shirgur
[...] maintenance deal stick. There’s a real mixed bag here with strong resistance in home markets, KPIs that have yet to roll out in full, an introduction spread running seven years and nuisances like myself, Vinnie Mirchandani, Frank [...]
[...] maintenance deal stick. There’s a real mixed bag here with strong resistance in home markets, KPIs that have yet to roll out in full, an introduction spread running seven years and nuisances like myself, Vinnie Mirchandani, Frank [...]
[...] Support fee hike last year. As planned, SAP should announce the results for the first set of SUGEN KPI’s in early December. However, two key SUGEN KPI project sponsors have left from the German SAP user [...]
[...] support that SAP had canned two years ago — also included the unilateral canning of a KPI process, developed after painful negotiation with SAP’s international SUGEN user group, that was [...]
now Takesolutions.com is providing take Gemini for SAP solution for RF data collection.
how are the maintenance revenues reinvested?
KPI
KPI Capital
Caitlyn, A small percentage goes back into the product. YOu can leverage the product direction via your user group or if you are a top 500 customer, you have access. Early adopters can also do the same.. – Ray
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