Monday 24th Oct 2016 - Logistics Manager

Support costs in the spotlight

The spotlight has been moved onto support costs following the decision by ERP supplier SAP to raise its support costs by five per cent and the ensuing frosty reception from its customers. The company will scrap its standard support package in favour of an enhanced enterprise model, the cost of which equates to a 29.4 per cent increase in costs over the next four years. The increase has caused concern among customers, particularly SMEs, who are unhappy at having to pay more for additional services they don’t necessarily need.

Support costs are already a competitive area, but James Hannay of Zetes thinks the emphasis will now change to focus on the whole support package. He says the focus will be on delivering value through people.

Teijken says support costs are influenced by a number of factors, however, “vendors should set a price for their technology and services which offers fair compensation to them for the quality of those goods or services provided and is commensurate with the return on investment a buyer can expect to achieve”.

Bird reckons support costs could become an area of competition, but only if excessive price increases are linked to excessive improvements in the quality of support. “It is the quality of service provided and the level of expertise possessed by a vendor’s staff that will increasingly become a differentiator,” he says.

Jackman argues: “The decision to change the support cost structure is primarily a competitive dynamic of the ERP market. Similar moves are not expected from SCE vendors.”