Stop overpaying for support

Feel like your vendor is failing to live up to its maintenance fees? Consider third-party options

Think about it. If you buy software every 10 years, at those percentages, you are paying 2.5 times the original license cost simply to maintain the app, says Ray Wang, principal analyst at Forrester Research.

“I don’t know anyone that is getting that kind of value out of their software,” Wang told me. And he should know, because he spends a lot of his time talking to CTOs.

Wang believes the financial arguments for taking your maintenance and support needs to a third-party enterprise software support vendor are huge — in some cases, cutting the cost of maintenance in half.

Two of the biggest third-party support companies are Rimini Street and TomorrowNow.

“Customers we talked to say they are getting the same or better performance from third-party suppliers,” Wang adds.

How is that possible?

While there may be many reasons for this, including the fact that up until very recently, maintenance and support from the major software vendors was poor, the real reason has to do with the fact the entire generation of software from the likes of Oracle, Siebel, SAP, PeopleSoft, and JD Edwards have all reached a high level of maturity during the past decade.

Seth Raven — founder, president, and CEO of Rimini Street, and before that of TomorrowNow, and before that head of service for PeopleSoft — says that when a new product line rolls out, it may take a year or two to work through the bugs.

“There has been no generational change in [enterprise] software, and the next is due somewhere between 2015 and 2017,” Raven says.

That may sound like some far-off time in the future, but it is actually only 7 to 9 years out.

Raven is right when he says we will hear a lot about SAP NetWeaver and Oracle Fusion, but it will take time before the code is written, the case studies are completed, and the products are adopted globally by the enterprise. In the meantime, as changes take place, the core is mature and likely to stay that way.

Forrester’s Wang says companies such as Rimini Street and TomorrowNow can halve the cost of maintenance simply because the profit margins for maintenance and support are incredibly large.

“By year three, the margins for the vendor are 40 to 50 percent; by end of life, it is about 80 percent,” Wang says.

Wang concedes that Oracle and SAP have improved their support programs. However, “for a lot of people, they left a bad taste in their mouth,” he adds.

The bad taste Wang mentions comes from a failure to return phone calls and a support process that required the customer to step through escalating hoops before being connected with an engineer who could actually resolve the issue.

By the way, Wang also says that Microsoft has done well in this area during the past several years.

One of Rimini Street’s key competitive differentiators focuses on just that aspect of escalation, Raven says.

From the beginning, customers are assigned an engineer who knows the product inside and out, making escalation unnecessary, Raven claims.

Although Rimini Street does not deploy offshore support, “we do time-zone parity,” Raven says.

Wang believes the Chinese will get into this market in a big way, adding that Indian outsourcers could have done this 5 or 10 years ago but are now too beholden to the major enterprise vendors to risk antagonizing them. The Chinese are better positioned to offer third-party support, he says.

For those considering third-party support, however, Wang adds a note of warning.

Because maintenance is such a huge part of the software business, anyone who offers that as a stand-alone service will be seen as a competitor.

Suddenly, a company using such a maintenance vendor may find itself without access to all the services and updates from its software vendor, or it might not be given access to future product direction. Simply put, a company may not be treated as a partner.

I suppose this is the big leagues and these companies know how to play hardball.

But you can play hardball, too. Remind those vendors that when the time comes to adopt that next generation of enterprise software, your company will have a long memory of who its friends really are.