SAP: Customers that got a good deal first-time round, unlikely to see reduced maintenance

SAP has said that customers should take it as a general rule that if they got a good deal first-time round on maintenance discounts, it is unlikely that they will benefit from new changes that allow companies to partially cancel unused licenses and the associated maintenance costs.

It was announced this week that SAP will be introducing more flexibility for on-premise customers, where not only will they be able to reallocate unused licenses to different on-premise solutions, but they can also apply to cancel some licenses.

Computerworld UK spoke to Jens Bernotat, SAP’s VP of Strategy & Business Development Maintenance Go-To-Market, who explained how customers might be able to take advantage of the new offer.

He said that users will be able to terminate any licenses from the ‘classic SAP maintenance offering’, which includes enterprise support, standard support, product support for large enterprises, and so on.

However, Bernotat was also keen to highlight that there may be some instances where it isn’t possible to cancel. He said: “There are hundreds of current and legacy price list items, so there may be a special case that I’m not aware of at the moment. Business One is out of scope, and for third party products we are subject to the contracts we have with the third party provider.”

SAP is going to recalculate the maintenance fees based on three product families: Business Suite, database technology analytics, and mobile solutions. SAP is doing this to make calculations easier. For example, if a customer wants to cancel 50 mobility licenses, it will not have to recalculate maintenance for Business Suite licenses – the latter will stay the same.

Also, if a customer has licenses bundled, where they have Business Suite, database and mobility licenses grouped together, it will work out the new maintenance fee as a proportion of the licenses being reduced. So, if a customer wants to reduce its mobility licenses by 50 percent, it will work out what proportion of the bundle is mobility licenses and then recalculate maintenance fees for the share of the bundle. The maintenance for the remaining share of licenses (Business Suite and database) will remain unchanged.

However, the recalculation will be based on a volume list price discount at the time of purchasing (not current volume list price discounts). So if a customer reduces its licenses, it is likely to end up paying more maintenance per license because of the reduced volume. It will vary from customer to customer whether this ends up working out as more maintenance overall.

Although, Bernotat said that customers with a good volume discount price are unlikely to benefit from terminating licenses.

“There will be situations where customers pay less, but we have a very complex licensing legacy and it is very difficult, if not impossible, to predict what will happen. Come to us and we will evaluate this with you,” he said.

“But you can probably take it as a general rule that the better your initial discounts have been, the more likely it is that you have a very good deal already and your economic attractiveness may be limited.”