Following a concerted and coordinated effort from groups of customers focused on IT cost reduction, SAP’s Enterprise Support package will no longer be mandatory for all customers as had originally been planned. Instead, the company will offer a tiered support model, effectively allowing customers to keep their existing support contracts. The reversal may have wider implications for software license agreements across the industry.

“We welcome this news from SAP and are delighted that it is offering greater choice to its customers and our members,” said Alan Bowling, chairman of SAP’s UK & Ireland User Group. The company says the option of standard support for software license agreements will still be available, albeit at an increased rate of 18%. The vendor is also to cancel proposed price increases for this year. It is a step in the right direction for IT managers keen to reduce IT costs.

According to a statement, the software license agreement for Standard Support includes legal updates, problem resolution, knowledge transfer and quality management to keep SAP systems running, while Enterprise Support adds “business continuity, business process improvement, protection of investment and accelerated innovation, and reducing total cost of operations (TCO) of a customer’s IT landscape”. With a focus on IT cost reduction, decision makers will be relieved that they retain control over making the additional investment decision or not.

In a blog post, SAP market commentator Helmuth Guembel said the decision was down to a potential huge fall in revenue and it could well see an increase in moves by customers to renegotiate software license agreement terms they expect from their service providers in the industry as a whole. “CIOs from SAP’s premium customer network gave feedback that is hard to print and by November, SAP was facing a certain maintenance income loss of over 200m Euros for 2010. The list of accounts that SAP in an internal analysis marked as ’maintenance at risk’ was long, much longer than anybody had expected,” he wrote.

Could 2010 prove to be the year when the pendulum of power may favour those focused on IT cost reduction through structured and co-ordinated negotiations?

As well as being a means to achieve IT cost reductions, improved governance of software assets throughout their lifecycle enables your organisation to mitigate risk, respond more quickly to change and manage complexity within the organisation. Software asset management, and the control and protection of software assets throughout their life cycle, is a critical component to any organization’s ability to successfully manage and reduce costs in IT.

The implementation of many IT processes, including configuration, release, or change management, is dependent on the organization having accurate knowledge of its IT assets. IT cost reduction is seriously compromised when an organization does not know what software assets it has, where they are deployed, how the assets are configured and how or by whom they are used.

In recent months there have been significant changes in Microsoft’s licensing frameworks and application footprint. It is a constant source of amazement and bemusement to colleagues and clients who do not have a direct involvement in IT procurement and software asset management that Microsoft’s licensing can be so incredibly complex that Microsoft needs to have extensive professional training courses on choosing licensing options.

Licensing is part of the ‘Microsoft Certified Professional’ development programme, part of which includes designing and providing Microsoft volume licensing solutions to small and medium organisations. Companies that are confused by the variety of Microsoft products, product licenses and pricing options can take advantage of are well-advised to seek professional software asset management support.

The fact is, buying out of the box is quite straightforward. But unless your organisation is no more than just you and a few other colleagues, you need to give careful consideration to how you license your Microsoft product requirements. If you are keen to explore how your organisation can better avail itself of effective software asset management to achieve IT cost reductions, please do contact me for informal or formal advice.