Managing Automation - February 2009 - (Page 16) FREE Online Membership managingautomation.com news managingautomation.com maonline Go online for daily news updates in perspective Alliances, Executive Appointments, Mergers & Acquisitions, Products Transform your business through technology FREE Membership includes: • Award Winning Editorial • Web Exclusive Articles • Whitepapers & Webcasts • Improved Online Tools and Expert Forums • TechMATCH: The most powerful product search tool in Manufacturing Technology. • Targeted Newsletters • Special discounts for Executive Conferences • “My Profile” which allows you to save products, comparisons and more Sign Up Today at: MANAGINGAUTOMATION.COM ered and rejected a similar increase. The SAP maintenance increase “has not gone down well,” Schaper said. “For us to be the longterm dominant provider in the SMB space and to continue to differentiate ourselves from Oracle and SAP, the lowest cost of ownership wins.” Other competitors have also been trying to use maintenance pricing to differentiate themselves in the market. “Given the publicity in the market, vendors like Microsoft have been pushing the differentiation message,” says Ray Wang, research vice president at Forrester. Microsoft last year adjusted its maintenance pricing to 16% of net license fees for users of its Dynamics applications. Despite some customer dissatisfaction, SAP has shown no sign of backing away from the price increase, analysts say. However, in oneon-one negotiations, experts say, SAP has shown some willingness to negotiate lower maintenance prices as part of larger deals. In the new Enterprise Support program, SAP kept in place the 17% maintenance rate for large customers paying more than 5 million euros per year in maintenance. Some customers contemplating large new license transactions have been able to negotiate their way into that category, analysts say. “SAP today is more inclined to respond to those kinds of aggressive negotiating tactics than they were six month ago,” says Bob Parker, group vice president at Manufacturing Insights, an IDC company. “In this economic environment, a bird in the hand is worth two in the bush.” Grumbling notwithstanding, few SAP customers have opted for third-party maintenance or to let maintenance contracts lapse. “I don’t see many looking at alternatives,” Masney says. “SAP is such an important part of a lot of businesses’ IT portfolios that most are very careful about keeping reliable support in place.” — J.M. LUMIGENT NABS FUNDING DESPITE WEAK ECONOMY Free Demo Request a Demo directly from vendors you choose I n what officials are calling “a redirecting of the company,” Lumigent Technologies Inc., founded in 2000, is getting a fresh start this year, announcing last month that it has secured $6 million in Series A funding from North Bridge Venture Partners and entering the marketplace as if it were a brand new company. And it should, as it has a brand new product, called Application Government, Risk, and Compliance, known as AppGRC, that moves the company beyond its database auditing tool roots and into a new world of business applications that automate compliance reporting in heavily regulated industries that include manufacturing. The existing tools, including Lumigent’s own Audit DB, require subject matter experts — in the form of consultants and even extra IT staff — who can implement a very manual-intensive compliance tracking process. The cost of such an approach, commonly referred to as a “compliance tax,” typically runs $2 million to $4.5 million per year. John Capobianco, who came on board as Lumigent’s president and CEO last year, experienced the compliance tax firsthand a few years ago when he took a company public and watched his finance costs soar from $300,000 per year to $2.5 million by having to hire several more internal people and six outside consultants. The real economic problem, he quickly realized, was the need for an automated compliance solution. Capobianco brought in his own subject-matter experts to create a new category of product that applies regulatory reporting in an easily deployed CRG control suite for business applications. In October, the company introduced AppGRC for Deltek Costpoint, a pre-packaged policy-driven audit trail of Deltek application activities. Late last month, Lumigent rolled out AppGRC for PeopleSoft Financial Management. The company will continue to bring new application-specific AppGRC products to market about every three months, and with the help of the VC funding, Capobianco expects the company to grow about 20% this year. It’s a bit of a reversal of fortune for Lumigent, and an ironic one at that, given the timing. “When I started to put [the investor plan] together, along came a damaged economy combined with a new president who has new and old issues to deal with, which means more regulatory pressure,” Capobianco said. But these things make the Lumigent solution that much more appealing for both investors and end users, he said. — S.N. 16 February 2009 http://www.managingautomation.com http://www.managingautomation.com http://www.managingautomation.com
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