Annual Maintenace Fees [Rimini Street Cover Story E-3 Magazine April 2015]

Annual Maintenace Fees [Rimini Street Cover Story E-3 Magazine April 2015]

Independent ERP maintenance: With money comes happiness

Providers of independent ERP software maintenance such as Rimini Street are known for charging only half the price of support from the manufacturer. However, independent support is capable of much more than just saving costs. It’s also about quality and strategic control of IT.

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Independent support is becoming increasingly important for ERP users, as a recent study undertaken in cooperation with Nucleus Research proves. This is because it is not just about costs, but also and more importantly, quality and strategic control of IT. In addition to simple cost savings, there are three main areas in which improvements can be achieved with independent software maintenance, as a study of 27 Rimini Street customers has shown.

Costly and unnecessary upgrades

The updates provided regularly as part of the ERP manufacturers’ application support require a significant expenditure of time and money. The average expenditure for companies with less than 500 SAP users is 150 working days or 125,000 U.S. dollars, while for very large organisations with over 2,500 SAP workplaces, 3,350 working days or 1.4 million U.S. dollars are lost. Even more important than the expense, however, is the fact that it is less important to companies to benefit from new functionalities than to maintain existing services.

67 per cent of companies which responded to a Panaya study gave this as their main reason for implementing SAP upgrades. Correspondingly, 76 per cent of the respondents to another Panaya study said that they had not activated any new business functionalities since their last upgrade. Companies which only implement upgrades in order to maintain existing support services can completely avoid this expense by using independent software maintenance services.

Intellectual property

The biggest advantage to SAP software from a business point of view is often the individual customisations. For SAP, these include the Z-programs, and the Abap and Java add-ons. This is because they reflect a company’s intellectual property (IP) and are what positively distinguishes the company from its competitors over time. This is why companies expend so much time and effort on customisations.

This situation is reflected in the support queries that Rimini Street receives. About two-thirds of these are not related to SAP standard code, but to customer-specific extensions and modifications. For this reason, many companies employ highly paid internal or external advisers to close this support gap. With providers of independent maintenance such as Rimini Street, support extends beyond the standard code to the customer’s specific ERP landscape, including all extensions and customisations.

Coordination effort and standards

Many companies attempt to simulate their issues in customisations or extensions to the ERP standard code in order to take advantage of the manufacturer’s support service. This is better than being left completely without support, but naturally requires the commitment of significant additional staff and financial resources. Another cause of additional coordination effort is the regular taxation updates that SAP, for example, publishes as part of its support. Depending on the individual customer’s situation, some of these may not be relevant and won’t require implementation to the production system.

However, the customer must generally work out for themselves which parts of the Support Packs or OS Notes are necessary, often by entrusting internal or external experts with this task. With Rimini Street, on the other hand, this service is included at no additional cost. This has always been their intended approach.

Every Rimini Street customer is assigned a round-the-clock contact partner whom they can consult for any maintenance question regarding their ERP landscape. This means that customers and support employees always know what they are talking about, which reduces the potential for misunderstandings and the requirement for additional consultation significantly.

Investing instead of saving

Processes and quality of support are aspects which increase the potential for savings beyond a simple decrease in maintenance costs. Nucleus Research confirmed that a Rimini Street customer reduces their annual maintenance costs by one and a half times. If they previously spent a million U.S. dollars on ERP maintenance charges, as a result of switching to Rimini Support, they now have an additional one and a half million U.S. dollars available in their IT budget.

Instead of using highly qualified internal or external ERP specialists to respond to support queries, these resources are available for important strategic projects. Finally, investment is the most intelligent way of saving, or as Rebecca Wettemann, Vice President of Nucleus Research puts it: “Independent support is an effective strategy to free up funding for innovation and strategic initiatives. Rimini Street clients, on average, save one and a half times their annual vendor maintenance fees each and every year. These are real savings that can be diverted to growth projects and innovation.”

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