Is Third-Party SAP Software Support Right for Your Organization?

While enterprise software publishers have validated the choice to acquire support services from third parties, the processes followed by some third-party providers has led to litigation. The legal landscape among third-party support providers may change over time. Nevertheless, enterprise buyers should look for providers that (1) protect  the software publishers’ intellectual property and thereby are not at risk of costly litigation (2) are not facing legal judgments that could subsequently interrupt or compromise service level.

Financial Differences: Conventional vs. Third-Party

Typical publisher annual costs are 18-22 percent of the original license purchase price. There may be additional charges for premium support, such as SAP’s Max Attention. These fees do not take into account in licenses that are not even in use (shelfware); so many organizations are paying for unused or unnecessary licenses. By contrast, third-party providers will typically tailor a pricing structure around what licenses you are using and the number and types of tickets you are logging on an annual basis. Research shows that organizations typically pay the equivalent of the original license purchase price in approximately three years.

Re-engagement with SAP, after a stint on third-party support, also merits consideration. Relicensing or paying “back” support are standard re-engagement options. In many cases, relicensing ends up benefiting the end-user organization and paying “back” support is negotiable. Organizations use this circumstance to right size their license count and/or purchase a new version at an attractive price. In addition, the end-user will have still saved money while leveraging third-party support.

Is Third Party Support Right For Your Organization?

The best candidates for third-party support share these characteristics:

Stable–Enterprises that operate in more stable or mature environments and have upgrade cycles greater than 36 months can save by skipping new releases or foregoing continual upgrades.

Highly Modified–Enterprises that are operating a highly modified software version can retain full support.

Planned Replacement–Enterprises that are migrating to another application (cloud or on premise) can cut costs leading up to parallel operations and eventual legacy system shutdown.

Duress–Enterprises that are undergoing financial challenge can respond by cutting near term support expenses.

Nevertheless, third party is not for everyone. Enterprises that should continue to acquire support services from SAP have these characteristics:

Initial Deployment of a Major Release–Enterprises that have just purchased or need to acquire a major release typically need access to the SAP’s corrective patches and deployment-related support interactions.

Highly Dynamic Technology Environment–Some enterprises maintain a frequent system upgrade cycle, such as every 18-36 months for a significant refresh. Therefore, having continual access to new releases and patches will be less expensive than switching from and then re-engaging with the publisher.

How To Choose A Third-Party Support Provider

Select–Identify a third-party partner that can satisfy the business requirements for all needed software support services: software support, managed services, and IT advisement capabilities.

Predict–Identify the expected savings. Verify the financial case for switching from SAP support. Ascertain the rules of re-engagement in case you might wish to acquire a future release.

Validate–Confirm that the preferred third party service provider’s delivery practices, processes, and methods do not violate your software publisher’s intellectual property rights.

Third-party support can be a powerful strategy to upgrade service level, lower or redirect IT spend, supplement your IT staff, or to reestablish control of your enterprise software roadmap. 

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