– By Steve Robins
SAP Sacks CEO For Failing to Deliver Customer Value
Sometimes the best solution marketing is about value.
It’s been one of the most interesting solution value stories of the last 18 months: ERP vendors’ exhorbitant support prices (at Oracle’s 90% margins) and SAP’s botched attempt to raise prices even further. It’s pretty obvious that ERP vendor greed has further weakened customer relationships while opening the door to a new cadre of support vendors.
ERP vendors charge high maintenance and support prices that are essentially insurance policies that enable their clients to receive upgrades and support. Problem is, many companies don’t need – and can’t afford – the broad and expensive maintenance and support provided by ERP vendors, so they’ve moved to competitive support firms like Rimini Street.
Yesterday’s sacking of SAP’s CEO is only the latest chapter in this tale.
Once again, two recent developments prove that LOW VALUE = BAD BUSINESS = BAD CAREER MOVE:
Just yesterday, SAP announced that CEO Leo Apotheker would be stepping down. According to today’s NY Times:
SAP, the German software maker, said Monday that it would focus on restoring its damaged customer relationships after a surprise management shake-up that cost the chief executive his job.
— NY Times
The move seems to have been prompted by SAP’s slow progress on SaaS offering Business byDesign and dissatisfaction with the handling of annual maintenance fees.
The Times goes on to say that,
A person with knowledge of the situation said Hasso Plattner, chairman of SAP’s supervisory board, had grown unhappy with the delays to the introduction of Business byDesign, SAP’s new line of Internet-based software, which is expected to make a full market debut in mid-2010, nearly three years behind schedule.
The person, who did not want to be identified because he was not authorized to speak on the matter, also said Mr. Apotheker’s decision to raise the annual maintenance fees SAP charges clients had angered customers who were struggling to stay afloat during a global economic recession.
— NY Times
The message is clear: low value to the customer = low job security.
And just last month, SAP actually backed down (!) on its support plans, reintroducing the less expensive 18% support plan, according to InformationWeek. According to InformationWeek, it’s not a complete win for customers, but it’s far better than 22% support.
Providing value to the customer: it’s not just about driving revenue anymore. It just might save your job too.
More from InformationWeek, February 8, 2010
SAP Customers Demand Value for Enterprise Support April 2009
Oracle, SAP and the Value of Maintenance & Support Contracts March 16, 2009
Fixing the Mix February 27, 2009
2 responses to “No Value, No Job”
Nice post. Interestingly, I was reading a different post prior to yours and I came upon this passage. To my mind, the point is that the best employees put themselves in the customers shoes and make their business decisions from the customer’s perspective.
“I’m writing about it because this is what I do. It is my area of expertise. I study groups of people who excel at something, examine the research, and draw conclusions.
I am not a housekeeper, but when I joined the Gallup Organization back in 1987, my first assignment was to design psychological tests to help Walt Disney World select more housekeepers like their best housekeepers. The initial step in the design process was to gather a small study group of the very best housekeepers and ask them questions to discover the traits or habits or insights they shared. So, imagine eight housekeepers sitting around a table, some nervous, others completely relaxed chatting away in English or Haitian Creole or Portuguese. One of them had been a housekeeper for only 18 months, while another had cleaned the same section of rooms in the same hotel for 23 years. They were of different races, sexes, and ages. They didn’t know each other.
And yet, when I asked them the question, “How do you know if a room is clean?” they all spontaneously gave the same answer: “To know if a room is clean, the last thing you do before leaving it is to lie on the guest’s bed and turn on the ceiling fan.”
“Because,” they explained, “that is the very first thing that a guest will do after a long day out. They will walk into the room, flop down on the bed and turn on the fan. If dust comes off the top of the fan, no matter how sparkling clean the rest of the room is, the guest might think it is as dirty as the top of the fan.”
I love this phenomenon: that people who look very different on the surface, and who don’t know each other, do actually share an insight or a practice or an approach, something you can discover by asking open-ended questions and then keeping quiet. I pursued this phenomenon with my next project, the study of the world’s best managers, which eventually grew into my first book, First, Break All The Rules. From this research with great managers, I now know that when you ask them an open-ended question, such as, “What is the best way to motivate people?” they all say the same thing. “It depends on the person.” And from this, and other similar questions, I also know that individualization is one of the practices shared by all great managers. I know this for certain, even though, as my team will attest, I am not a great manager. “
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