SAP Says 2009 Ended Better Than Expected, Rejiggers Maintenance Fees

Published: January 18, 2010

by Timothy Prickett Morgan

Enterprise application powerhouse SAP said last week after a preliminary review of its books that it would finish off 2009 a bit better than expected. Don't get too excited. Just because business in Q4 was better than expected doesn't mean it was great. And that's why SAP also said that it was rejiggering its maintenance fees to reflect the new economic realities out there in the global economy.

Based on U.S. accounting rules, SAP said its sales for software and related services in the fourth quarter ended December 31 would come in at €2.56 billion, down 4 percent from the €2.67 billion level the software company brought in during the final quarter of 2008, when the economic meltdown was revving up to full speed but had not quite reached it yet. Within this, SAP said that about €1.11 billion came from software sales, a decline of 16 percent compared to the year-ago quarter, and that its overall revenues, including other services and training, fell by 9 percent to €3.18 billion. In its first pass over the books, SAP said that its European sales fell by 8 percent to €1.38 billion, while sales in the Americas fell by only 2 percent to around €820 million and sales in the Asia/Pacific region rose by 6 percent to around €360 million. SAP will report its full results on January 27.

As The Four Hundred reported as 2009 was winding down, SAP put off a maintenance price hike on its software so it could mull over what it should do with support prices in 2010. As it turns out, SAP has done two things. First, it has kept its support contract prices the same for 2010, so there is no price hike for customers who were already paying at the 2009 rate levels. (SAP warns that for customers who were, as part of long-term contracts, paying maintenance fees that were lower than the 2009 levels might see an increase as they are brought up to the current rates.)

The company also announced that it was splitting its support offerings in two, peddling its existing support as SAP Enterprise Support and debuting a new, lower-cost SAP Standard Support option for customers who are still tightening the IT budget belt in 2010. The Standard Support is the basic stuff--software updates, problem resolution, and the like that is needed to keep an SAP ERP suite current and running. The Enterprise Support is a mix of additional business continuity and business process improvement support, provided through SAP's Active Global Support organization, which can make an SAP suite hum at peak efficiency. Not everyone can afford this, and hence, SAP has split its services into two. Customers must have been balking at the high price and vagueness of what enterprise support consisted of for SAP to make such a change, and to its credit, SAP responded to the market and seems intent on making it up in volume.

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