– 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