G214

Two of the biggest makers of business software have raised prices, a sign that consolidation in the industry may be easing the competition over prices that has been a hallmark of the last decade.

SAP AG said Wednesday that it has raised prices for the ongoing support and customer-service fees, known as maintenance, that are part of large software purchases. The move comes one month after rival Oracle Corp. raised list prices for its software.

Unlike price increase for food, fuel and many other commodities, the changes in software don't stem from a shortage of supply or a rise in demand. They are attempts by software makers to increase their bottom lines, said Brendan Barnicle, an analyst at Pacific Crest Securities Inc.

Makers of business software -- used to track a range of corporate information, including financial, inventory and sales data -- spent much of the last decade competing on price, he said. Now an acquisition wave has reduced the number of suppliers and has reduced the pressure on SAP and Oracle to lower their prices.

SAP, based in Walldorf, Germany, charges many customers an annual maintenance fee equal to 17% of the upfront price of the software. Starting Jan. 1, that fee will be be raised to 22% and phased in over four years, the company said. In exchange, customers get enhanced service, including around-the-clock support and help to identify and fix problems with systems from other tech companies that interact with SAP software, a company spokesman said.

In June, Oracle released an updated price list for its software that included a 15%-to-20% across-the-board increase for customers in the U.S. Prices for customers in Europe stayed the same and fell in some other parts of the world. An Oracle spokeswoman declined to comment.

The moves come as many businesses look to rein in their tech budgets. A recent Goldman Sachs Group Inc. survey of information- technology executives found that tech budgets are almost stagnant. Yet companies that depend on some key products don't have a lot of choice.

"Price increases are a fact of life," said Rod Masney, a technology executive at Owens-Illinois Inc. and the past chairman of a group representing SAP users in the Americas.

Owens-Illinois is in the middle of installing SAP's software, and Mr. Masney said he is compensating for the cost of the project by cutting spending in other areas. He said he hopes that he can offset the increases by taking advantage of some of the new support services SAP offers. Mr. Masney also buys database software from Oracle and said the new price models for both companies could have a "ripple effect" for tech departments.

The new services from SAP might not help all businesses. Most only use the support services a handful of times a year, said Ray Wang, an analyst at Forrester Research. He sees the price increases as a sign from SAP and Oracle that they face less competition. Businesses that have already invested in software from the companies can't afford to rip the systems out and replace them with software from other companies.

Still, Mr. Wang said, the extent to which the price increases affect businesses remains to be seen. Many big companies negotiate prices individually and never pay list prices. Yet, raising list prices or maintenance fees is akin to raising the sticker price on a new car and may affect pricing negotiations.