- SAP outsourcing its support to low-cost countries with English as a second language has greatly degraded SAP support.
Outsourced support for SAP is a popular activity. Many companies see tantalizing opportunities at cost savings.
The Support Conundrum
HANA proponents can list all the positive aspects of in-memory computing, but that is not a relevant customer issue. The biggest problems that customers face is not the speed of processing of transactions. It is not that business intelligence output does not run fast enough. If SAP customers business processes they may be happy but not was much as resolving other priorities.
All this focus on HANA has little to do with what is best for customers and what will improve performance. HANA is far more about SAP meeting its revenue objectives. It is about expanding SAP’s database layer line of business. This is why the conversations and marketing around HANA are so deceptive. The supposed performance benefit of HANA vis-a-vis other databases (like Oracle 12c for example) is not true. But it is simply the justification for making customers buy what SAP wants to sell.
Top Issues for SAP Customers
The speed of the database that SAP applications use would be far down on the list of factors that sub-optimize the benefits of the SAP system.
There are far more pressing issues that SAP customers face such as:
- Maintaining current systems.
- Improving the uptake of the system by users.
- Configuring existing functionality that is working as desired.
- Maintaining their master data
- SAP customer support.
This final bullet point of support is addressed in the book SAP Nation 2.0 by Vinnie Mirchandani. Vinnie is one of the few writers who writes objectivity about SAP:
“While Bess was observing partner booths at SAPPHIRE, customers have been complaining that SAP’s own support has progressively gotten worse, even around the core SAP product.”
This quotation is also from SAP Nation 2.0
“Another customer is TT Electronics, a $1 billion UK based electronics manufacturer, whose CIO Ed Heffernan has been quoted as saying (SAP maintenance) is effectively an added tax that I have to pay for with no value in return.”
As is this one…
“Incitec Pivot, a $3 billion Australian industrial chemical company that has been an SAP customer for over two decades, uses Rimini for its ECC 6.0 and BW support. Besides the savings, CIO Martin Janssen cites better service: “We receive very clear service levels and faster case resolution that we never had previously.”
I sometimes help customers in following up issues that mean working with SAP support.
A Problematic Allocation of Resources
While HANA receives massive SAP marketing and sales resources, people from the outside looking in have no inkling of how degenerate SAP support has become. SAP has minimized the investment in its support resources to the degree where the value-add is tiny. Still, SAP continues to receive massive support revenues from customers. It seems as if a significant awakening is imminent. SAP allocates most of its compensation for people that sell new solutions, not for those that maintain solutions. This is true even though SAP receive the majority of its revenues from support.
Getting Run in Circles
I have many OSS SAP support notes where SAP customers are run in circles, and customers are left to fend for themselves. My experiences opening tickets with SAP. In so many cases, I needn’t have bothered.
The English skills of many of the SAP support resources are quite poor. I have to rephrase my sentences with them. I have to ask the support person to backtrack on assumptions because they do not understand what I am writing. I have a long history as a technical writer, so that is a problem if even I can’t get issues across.
Support Requires Proficiency in the Customer’s Native Language
And let us ponder this. If SAP support resources can’t write coherent emails in English, how can they document anything? Documentation is foundational to support. It what allows the leverage of using accumulated knowledge. Most SAP support resources would score a C- or D in an English proficiency exam. This is most likely because, for almost all of them, English is not their first language, and SAP demands the highest possible margin on support.
I find it amusing that we like to discuss the importance of literacy in the US. While these people may be literate in their native language, they are not literate at any reasonable level in English. SAP could have 100% literacy in its support organization, but it prefers not to, due to cost. The official position on literacy should be adjusted. Large multinationals are for literacy in their support organizations if it is cheap. They don’t value it if it costs them money (that is the definition of “valuing” something”).
Who Pays the Price for English Communication Limitations of SAP Support?
For SAP, mistranslations are their customers’ problem. Let the customers bear the costs of working with support resources that are still trying to master both the system and English.
This travesty is not found in some small, inexpensive software vendor. It exists in some of the largest and most affluent software companies in the world. HP, IBM, SAP, and Microsoft have all spoken on this topic through their actions.
SAP Support: Better in Content Knowledge than (English) Literacy?
And as far as content knowledge the story is not good there either. Too often support personnel comes to the issue completely fresh and uninitiated.
If you bring up an issue with me in my subject area in SAP, I will have often tested it or run into it before. I often have it documented at Brightwork Research & Analysis, and I don’t work in support. I do not see OSS notes or SCN (two of the primary sources of SAP support) documented to the level I have documented issues at SCM Focus. Here is an article on parallel processing in SNP, and another on the fair share logic in SNP. SAP is a $23 billion corporation and the 4rth largest software company in the world. I am one person. How small must SAP’s priority for support be?
Of course, I also can write that specific functionality does not work at all or as intended. SAP support hides this from customers as long as possible and will not own up to it. They might say, it is not working in “your system.” But they know full well that the functionality is completely broken. One of the best quotes I heard from SAP is from a comment on this article where SAP blamed the cloud. I recall one go around with SAP where they had pulled in people from consulting to look at the issue. They just said it seemed to be set up as it should be but they could not explain why it was not working.
The Issues with the OSS Note System
In OSS or SCN if the functionality does not work, it is papered over, or the thread of discussion stops. As was explained by the editors at SAP Press when I wrote a book for them, my job in providing information in the book was to “make SAP look good.” Not to write what is true mind you, write what made SAP look good. If something does not work, then you don’t bring it up in the book. That way SAP “looks good” but users then stumble over it later.
Problems with support are magnified by SAP’s lack of specialization among its support personnel. This is one of the most fundamental concepts of support efficiency, and SAP cannot get it right.
I do not know how SAP support is internally configured, but I don’t see much specialization. If a person is focused on one area, they can much more quickly provide value because they don’t have to research each ticket anew. And of course, the more they specialize they more they will know in that area.
This brings up the topic of the unqualified personnel in SAP support. Often, I open tickets because the customer wants me to. That is, I often don’t expect support to provide any resolution. What tickets often do is burn my time while we go back and forth on opening ports so they can test the system. SAP consumes a lot of their customers time because their support investment is inadequate.
A recent Nucleus Research report titled “6 out of 10 SAP Customers Wouldn’t Buy Again,” a quotation gave SAP a grade of B in their support. And that SAP partner received a D, with the comment:
“There’s no support. It seems like they get the account and they shove you under the rug.” (regarding the partners that is).
Going through my support experiences with SAP, “B” just does not come to mind.
How Does SAP’s Support Compare to Best of Breed Vendors?
If I compare all of this to many best of breed vendors, SAP looks quite bad. With the best of breed vendors that I work with, I can get detailed answers from true subject matter experts in just a few hours. The difference is stark. And the prices these best of breed vendors charge for this support is so much lower than what SAP charges.
I own software myself that I use for prototyping, and I pay a yearly support contract. And the vendor I use offers excellent support. This is why Gartner’s weighing of software vendors by size is so vapid. Support is inversely related to vendor size. That is the large vendors that Gartner likes to promote (and take so much money from) provide worse customer service than smaller vendors. If you look at Gartner’s criteria for the Magic Quadrant, larger vendors receive a boost in the ratings which increases their “Ability to Execute.” This affects regardless of the actual support capabilities of the vendor. I cover in the book Gartner and Magic Quadrant: A Guide for Buyers, Vendors, and Investors this appears to have been specifically designed to increase the ratings of the larger vendors versus, the smaller vendors.
Ahhh……..the Joys of International Support
If we think of a typical large vendor support system, they will in almost all cases rely on offshore support. These are support centers that are barely part of the software vendor. I would debate as to whether SAP’s support technicians that are based in Bangalore are even part of SAP. This is because they are so poorly paid, and the turnover is so high. This may as well be an outsourced operation that is providing support services to SAP. They would not know any of the US resources that know.
When I work with smaller software vendors, I never have to deal with this. The support people are genuinely part of the company. They know the other people in the enterprise as they are real employees.
How Much is SAP Charging for Support?
The official SAP support is 20% of the initial license cost in support per year. Many companies, for a variety of reasons, end up paying more than this. One example is support for unique things such as the SNP optimizer. In addition to overpaying, customers are getting bad information from the group that supports the SNP optimizer in SAP. And there are plenty of other examples of this. This group offers incorrect information that I tested six years ago and found to be false. SAP support cannot provide accurate information on this because it undermines the need to use the functionality. To add insult to injury, this component is not covered by the standard SAP support.
The price that SAP charges for its support has nothing to do with SAP costs. Oracle moved to 22% maintenance several years ago, and SAP has been patterning on this percentage.
SAP attempted to go to 22% support in 2008 but backed off due to user pushback. The support hike was pushed to 2016.
Support is “cleaning up” after the party. However, SAP’s heart just isn’t in it. Sometimes SAP will send out specialists to address why applications are not working as intended and customers instead will get pitched new applications rather than fixing the old ones. The emphasis and the compensation at SAP go to those who can sell and introduce new solutions. Why this is not more broadly discussed, I do not know.
Support Failings Covered up by ASUG US
Entities like ASUG US that one would think would focus on this issue give it no coverage. I checked their website for “support problem” and did not find a single article. ASUG US’s perspective can be neatly summarized as the following:
“Oh give me a home where the buffalo roam,
Where the deer and the antelope play,
Where seldom is heard a discouraging word,
And the skies are not cloudy all day.”
It works best if you sing this little ditty. Holding hands with a group in a school play is even better. Oh yes, it all good in the mind of ASUG US. (If ASUG US had a mascot, it would be an ostrich or maybe a lap dog.)
How can this be?
- Is ASUG paying attention to the SAP’s customers concerns or are they censored by SAP?
- Does ASUG have even the tiniest percentage of independence from SAP?
ASUG US spends most of its time getting SAP customers all bubbly on new SAP applications. They are so censored on anything negative about SAP that they are a user group in name only. I have coined a new term for ASUG US. It is “SAP Marketing Apparatus Part Deux.” Any attendance at ASUG events or reading of ASUG articles should be framed regarding ASUG simply being another marketing arm of SAP. SAP does not need yet another marketing arm to get their message across and to censor all criticism.
Breaking in SAP Support?
There are examples from a project that had already been live for 18 months. When I tell people how long it takes to get APO “dialed in” many people who don’t work in it can’t believe it. However, even after this time, there are still many issues with the system, some of them severe. The following applies to this support example:
Professionally Managed Teams?
There appears to be a lack of professional management of the team. Rather than presenting the façade of a large established company which is very experienced in support, the support team simply seems more like it is a loose affiliation of individuals who provide little visibility into what they are working on. The client could only hire four people in a different country, allow them to work from home, and end up with the same level of organization provided by currently this company.
Support as a Black Box
The support is perceived as a black box by the client resources that work closest with them. After more than a year, the company is still unsure as to who is actually on the support team, who is working on what. Whether the support resourced are full-time on this account, etc.. In such a situation, to maximize revenues, there is an incentive to assign resources to multiple clients. There may in fact only be 2 FTEs assigned to the account or 1.5 FTEs. It simply seems to be an unknown.
Issues with Transparency
There is a lack of transparency to the jobs and basic loading and cleanup activities that are occurring in APO.
There are not either detailed explanations or documentation of the changes made by the outsourced support. The examples of what was done to fix issues are provided by support in short emails with cryptic descriptions such as “I have run the consistency check for the live cache to iron out the problem….Please try now.” This does not improve the understanding of the system for the client, leads to reappearing issues and is symptomatic of a group that lacks time to investigate issues thoroughly.
Data Integrity of the System
Data integrity in the system is getting worse, even after over a year of practice managing and controlling the system.
None of the support resources speak English as a first language. It is a grave error to place a non-native English speaker as the lead and main communication conduit to support. Any future contract with any support organization should stipulate that at least the lead should be a native English speaker. They also must be accomplished in writing in English as this is the primary communication method for support. As is well known, writing in a language is a higher standard and requires more skills that speaking a language. If this is not stated in the contract, the client will not get this, and the client will again have one of its resources converted into the translator between client resources and support personnel.
The Reality of International IT Support Outsourcing
The outcomes of outsourcing are much different than the concept. Firstly, even if outsourcing were successful, it would mean reduced employment in the US. It is not only reduced employment generally, but reduced employment in a skilled sector and many would argue the strategic sector of the economy. This issue, as are most matters relating to employment-oriented considerations are completely papered over both by the company, and by the press. Essentially, for decades industry has been paying universities and their economics and business departments to write facile papers which propose that eliminating US jobs is good for the economy because it means more efficiency. Not surprisingly, this job elimination never applies to the truly politically connected professions such as executives, lawyers, doctors, etc.. all of which have very powerful anti-market restrictions on competition within their professions and do not allow foreign competition at all. Secondly, it turns out that outsourcing is in my observations at multiple clients, it does not work, and is incredibly destructive to the competitiveness and effectiveness of US companies.
The reason it continues is that it shows short term and illusory cost savings, which executives can then use to make a case for increased personal compensation. Whether the executives who make these decisions know they are undermining their company’s capabilities is unknown to me. Yet the fact is that it is, and if they don’t know or have not figured it out, they have not made any effort to ask their representatives what the level of IT support is that they are getting from these outsource agreements.
SaaS vs. Outsourced IT Support
While outsourcing is almost entirely negative, SaaS is in my view a genuine opportunity. SaaS is different from outsourcing in many ways, and a few are listed below.
- SaaS is based less on scanning the globe for low-cost labor, and more on assigning workload to those best able to manage it (i.e. vendors who design and implement their software are put in charge of maintaining it). This is particularly appropriate for complex applications such as planning software but also applies to simpler, but highly collaborative software such as sales force automation.
- SaaS is not based upon removing the jobs from the US and taking them to a country where English is not spoken well, or driven based upon lowering wages to the absolute minimum.
- SaaS does not have middlemen. The software vendor is contracted with directly, and there are fewer opportunities for either professional rip off firms like Accenture, Deloitte and IBM, or Indian middlemen to take the lion’s share of the consulting contract.
So while outsourcing is based upon pure country lowest common denominator de-skilling, SaaS is a true value add. Strangely, outsourcing has become extremely popular while SaaS is only moderately popular. This I attribute to the fact that consulting firms are more influential than software companies, and they make money from outsourcing, while they would likely lose money from SaaS (they would lose many lengthy enterprise implementations and their power would be reduced vis-a-vis the software vendor). So the large consulting companies very rarely recommend SaaS solutions.
We are not against outsourcing under all circumstances. However, outsourcing that is simply driven by a desire to obtain cost savings rather than outsourcing to an external party that has extra capabilities typically does not work very well. Strategy consultants tend to have very hard and fast rules about what should be outsourced and what should not be. However, whether outsourcing is performed or not is a lot less important than how it is performed. IT support is an example of outsourcing that has been very much driven by costs and has resulted in reduced quality. This is interesting because IT was supposed to be a major enabler for the business. Why a company would allow its disablement through outsourcing to low-cost and quality providers is confusing, and some of the largest companies with the largest profit margins that have oligopolistic power in their markets make little sense. In all the companies I have worked in, I have yet to see one where outsourced IT was able to match the quality of the internal IT organization.
Cost Savings Versus Gaining Value From Previous Implementations
While strategy consultants are telling companies to outsource IT, there are areas which are not outsourced which can benefit from outsourcing. We are on record as saying that outsourced supply chain planning can be a very good choice for companies (and we have created our service around it). However, this is based on comparative advantage and both quality improvement and cost reduction. This is the same rule of outsourcing that individuals typically apply. For instance, a dry cleaner can clean and press a shirt both at a lower cost and at a higher quality level than can an individual. Therefore it is a perfect candidate for outsourcing. Companies often waste large amounts of money on supply chain planning implementations, and even large companies have a problem mastering supply chain planning applications and concepts. A third-party that concentrates on planning, can, we believe, do a better job than those that “dabble” in planning. To be frank, most companies are just dabbling in planning and are not serious about becoming very accomplished in it.
Robotic Outsourcing Decisions
Unfortunately, companies use overly simple rules to determine what should be outsourced, and both outsource areas that often should not be outsourced and keep things in-house that could be outsourced. This “advice” is close to content-free and displays horribly inept thought processes presented by some of the biggest strategy consulting firms. Interestingly, although the experience with IT outsourcing has been quite poor, it continues. Many CIOs simply have a deaf ear to the user community and continue to present horrendous outsourced experiences as significant successes that they were able to enact under their watch. They will present to other executives the cost savings, without mentioning the precipitous decline in service level. For all the strategy consultants they hire, they have no way — aside from the rather fictitious metric of tickets opened and tickets closed, to measure if their outsourcing decision helped the company.
SAP Partners as Email Forwarders
Nucleus Research brings up an interesting point that I have also seen. This is that SAP partners are often little more than email forwarders to SAP. SAP partners frequently skimp on the resources to make the highest possible margin.
I recall one partner that signed a support contract for HANA. Unfortunately for their client, they did not have a single HANA resource that worked for them. Instead, they had a support individual who spent his time forwarding the emails from the customer to SAP. This support person from the partner brought no value to the scenario. The support person was in an awkward spot as they did not have the knowledge to answer any of the customer’s questions. This became increasingly apparent to the client. This consulting company eventually lost this support contract.
Implementation Partners as Support Entities?
It brings up the question whether there is ever a good reason to use a SAP consulting partner for support. I can’t think of a single SAP consulting company that has any reputation for support.
The businesses that do provide SAP support as a primary line of business are not SAP partners. SAP would never refer their customers to an actual professional service organization. This is because these third-party support organizations don’t intermediate between the client and SAP. Instead, they take the entire support contract from SAP.
As both SAP and their partners view support contracts as nothing more than areas to get high margins. Thus it is more logical to find companies that focus on SAP support rather than considering it an afterthought.
International outsourcing of IT support is not working for US business. The level of support I am witnessing from outsourced IT organizations has degraded significantly since this trend began. In many cases, the business feels as if they have no support, and they begin hiring their own IT people to develop workarounds for them. Because outsourcing does not work, it essentially breaks down the labor specialization within the company because now the business has to be their own IT support. This is one reason that spreadsheets and offline Access databases are not decreasing after all the years of implementing enterprise systems. The fact is that the business is finding they have to develop offline tools because the basic maintenance of enterprise systems is not performed correctly. Outsourcing is one reason for this, although there are certainly others. If companies expect to have effective IT support, they must be willing to pay for it. It makes little sense to spent $250 million on a fancy SAP implementation if the company decides to outsource the support of these types of systems to the lowest cost bidder. Unfortunately, this is exactly what is happening.
The simple fact of the matter is that many support companies are not adding value over performing the same hiring that any company could do in a foreign country. Communication issues increase drastically with outsourced support and communication is one of the most important requirements for support. IT outsourcing seems to be driven by cost reduction rather than a search for comparative advantage and an increased in quality. In general, it ‘s hard to see the benefit in total of outsourcing SAP support.
There is no way around it. SAP’s support is both expensive and of poor quality. It is of poor quality universally and is not a competitive offering.
Top Issues for SAP Support
- SAP invests little into support. It is seen as simply another way to charge customers for doing almost no work. It is known that SAP reaps roughly 90% margin on its support. SAP wants the margin rather than having any interest in investing in the support that is so lauded during the sales presentation.
- SAP and SAP partners push for customers to get on the latest versions and to install enhancement packs. This is a cost treadmill that often does not lead to more functionality being put into the field.
- SAP’s ticket component of support is of such low quality that it can be replaced by hiring spot consulting to follow up issues. And that is only one of some options which, of course, includes outsourced support
- SAP customers, in most cases, are not performing analysis on what they get from SAP to justify this support. In an increasing number of cases, it is not worth what SAP wants for it.
Financial Bias Disclosure
Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.
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I cover support implications in the following book.
Getting to the Detail of TCO
The Mechanics of TCO
- Understand why you need to look at TCO and not just ROI when making your purchasing decision.
- Discover how an application, which at first glance may seem inexpensive when compared to its competition, could end up being more costly in the long run.
- Gain an in-depth understanding of the cost, categories to include in an accurate and complete TCO analysis.
- Learn why ERP systems are not a significant investment, based on their TCO.
- Find out how to recognize and avoid superficial, incomplete or incorrect TCO analyses that could negatively impact your software purchase decision.
- Appreciate the importance and cost-effectiveness of a TCO audit.
- Learn how SCM Focus can provide you with unbiased and well-researched TCO analyses to assist you in your software selection.
- Chapter 1: Introduction
- Chapter 2: The Basics of TCO
- Chapter 3: The State of Enterprise TCO
- Chapter 4: ERP: The Multi-Billion Dollar TCO Analysis Failure
- Chapter 5: The TCO Method Used by Software Decisions
- Chapter 6: Using TCO for Better Decision Making