News & Views

March 23, 2011 from InformationWeek – “Can software licensing get any more ridiculous? My company recently concluded a $900,000 software purchase, after reviewing the products of three major vendors… I understand that our software vendors must earn returns that support continued investment and innovation. But how much time and effort would be saved by both parties with simpler, more transparent licensing methods? It’s time for a change.”

180 View – We too have seen a wide variety of pricing models making it difficult to compare costs by vendors. Don’t wait until a decision is made to know the fine print.

January 2011 from CAmagazine and written by Michael Burns – “A major acquisition such as an ERP system should be considered a lifetime investment. It’s not just a software purchase; it’s a contract that includes maintenance fees, which will exceed the cost of the software in four to five years. A good dose of due diligence is in order — not only in testing the software and assessing the vendor, but also in reading the contract… ”

September 7, 2010 from InfoWorld – “…Here are the top tips from consultants who help customers negotiate pricing, terms, and conditions with vendors such as Cisco Systems, EMC, Hewlett-Packard, IBM, Microsoft, Oracle, and SAP…”

180 View – There are a few good points if you’re new to negotiating with technology vendors. Remember that the ERP vendors in particular anticipate that their new clients will not want to change systems again and so they are more willing to negotiate license fees, terms and conditions but reluctant to negotiate maintenance fees. But in the heat of the deal, anything is possible.

March 30, 2010 from InfoWorld – “When the economy is bad, businesses hold off on buying new enterprise apps and instead try to prolong the life of the ones they have. But there’s still the significant expense of vendors’ support contracts. Third-party support contracts may be the answer to reducing that cost.

 Software vendors don’t want to lose those support revenues, especially since they’re making less in new and upgrade sales. Some even have tried to raise their support income through schemes such as tiered support (a debacle at SAP) or all-or-nothing support (Oracle’s most recent approach to extracting more money from customers) — but doing so risks driving customers even faster to third-party offerings…

 Is third-party support right for you?

The answer depends mainly on two factors, says Forrester Research analyst Paul Hamerman: where the application is in its lifecycle and how important it is for you to stay current with software upgrades. “If [a user] has an installation that’s a couple releases back, customized, and difficult to upgrade, third-party support is a more viable option,” he says. “If it’s an expanding business or a new installation, third-party isn’t a good option because you’re off the enhancement pack…”

180 View – Even if you’re not interested in third party support, the article does provide advice on maintenance agreements.