SAP Cleaning Up Its Act, But Where Are Oracle And Microsoft?

Last Updated May 12, 2009 7:29 PM EDT

I noted in an earlier post that software vendors like SAP and Oracle have been abusing customers through various means just short of legal extortion. Customers have complained about vendors forcing them to purchase applications they don't need just to meet artificial and internal quotas, and to pay ever-rising maintenance fees.

Well, the vendors have begun to address those issues... sort of. SAP, the world's largest vendor of enterprise applications, got together with its user group and toughest customer critics to come up with a set of benchmarks against which it will measure itself. Bill Wohl, the company's vice president of global field operations, told me that, "if we don't meet those criteria, we're going to wait on price increases until we prove that we do."

The measures focus on support provided by SAP after purchase, which is a sore spot for customers -- and vendors who want to have happy reference customers. In many cases, customers are pretty much left to their own devices once they've paid for the software license -- a key contention of software-as-a-service (SaaS) vendors who claim a subscription model forces them to take better care of their customers. (The SAP benchmarking agreement, however, doesn't include promised feature sets that aren't delivered and upgrade cycles that lag, but that's material for a separate post.)

Alan Bowling, who leads the SAP user group that negotiated the benchmarking deal, noted in a comment to analyst Ray Wang's post analyzing the terms of the agreement that "the benchmark group companies are being selected by [the user group] against a framework of size of company and regions across the globe." Bowling, on his own blog, issued a clarion call to Oracle customers to challenge their vendor in a similar fashion.
Oracle users already pay 22% -- SAP users won't until 2015, and then only when SAP deliver true value for the fees.
Oracle has offered its own tepid response, temporarily waiving some fees for some older product lines. As Larry Dignan noted wryly, "your mileage on Oracle's fee moves will vary greatly." Unlike SAP, Oracle refused to comment for this post. Microsoft, for its part, has not budged one iota, other than to offer discounts to its channel partners, which is of no use to its customers. Paul DeGroot, lead analyst at Directions on Microsoft, noted, "if Microsoft is willing to take a bath on the upfront licensing costs, it gives the partner more room to make money on the upfront planning, deployment, customization and maintenance revenue."

So partners, the life blood of Microsoft, get coddled while customers are left to dangle. That has got to change, or customers will find SaaS or other alternatives to their all-too-frequently-abusive relationships.

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  • Michael Hickins

    Michael Hickins has written about technology and business for BNET, InformationWeek, InternetNews.com, eWEEK -- where he was executive editor from 2007-2008 -- The Curator, Pseudo.com, Multex Investor, Reuters, and Conde Nast's WWD.com. Hickins is the author of The Actual Adventures of Michael Missing, a collection of short stories published by Alfred A. Knopf in 1991. He also published Blomqvist, a picaresque novel set in 11th century Europe, in 2006. Hickins remains passionately interested in the intersections of business, technology, politics and culture, and endures a life-long obsession with baseball. He is married with two children and lives in Manhattan.