When Vendors Raise Annual Support Fees

Software vendors have recently announced increases in their annual support fees. What to do?

I recently published an article on cutter.com describing options for clients facing increases from their vendors in support of enterprise systems. This post lays out two of those options.

Vendors such as Lawson and SAP have recently announced increases in their annual support fees to many already struggling clients. In any economy, organizations would meet these increases with skepticism. This article details options for organizations in response to these potential increases.

Vendors need to be very careful during these times.

Biting the Bullet

Organizations can simply agree to the annual support increases without attempting to “do more with what they have.” Organizations without the resources (financial and human) to expand their systems’ functionality should probably go with this option. In this case, reupping at slightly higher prices is simply the lesser of two evils: an extra US $15,000 in annual support may be a tough pill to swallow but is hardly grounds to jump from Vendor A to Vendor B. Remember: vendors benchmark themselves against one another.

Independent Support

price-iconClients may be able to garner savings by canceling its support contract with the vendor — or at least failing to renew it. Independent support is typically significantly lower than vendor-sanctioned support. For example, SAP clients looking for support alternatives have plenty of less-expensive options, including many independent firms. To this end, Rimini Street just announced independent SAP support services.

While the cost savings can be substantial, independent support does have its risks. Most notably, it may invalidate any support agreement with the vendor, endangering future operations. Clients should ensure that independent support vendors are qualified. Also, be wary of very inexpensive support — clients tend to get what they pay for. Deals that appear to be too good to be true usually are. To read the entire article on cutter.com, click here.

Additional Comments

Vendors need to be very careful during these times. Senior management at many clients may believe that open source and SaaS alternatives are not ready to replace stalwarts yet. Maybe they’re right. Adding fuel to the fire via increased support fees may well increase the likelihood that clients abandon traditional alternatives to pursue newer ones, especially if clients perceive support increases as excessive, unwarranted, or exploitative.

Ray Wang touches on this in his recent blog post. Vendors need to be careful of, to use his words, “forcing Kool-Aid down the throat of employees.”

philanimated

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