Monday’s Musings: The Three Pillars of Software Maintenance And Support Policies
After more than 350 conservations with customers about the maintenance and support issue in the past 4 months, it’s becoming quite clear what users expect from their software vendors. While those issues can be broken into tens of categories, three themes have emerged that include:
- Choice. Customers want to choose between tiered plans. The best plans allow customers to select the option best for them. Choice means the availability of a basic plan or the full range of services expected in a comprehensive “insurance policy”.
- Value. Users expect plans to show ROI or meet service level agreements (SLA’s). These SLA’s should reflect outcomes not just process. If a user contacts a help desk 5 times a year and pays $500,000 in maintenance, at $100,000 a call, they better be getting platinum response levels of 1 hour or less and a resolution in 24 to 48 hours.
- Predictability. Maintenance and support remain one of the biggest budget items in the ownership of packaged apps. Changes in price, policies, or service levels should be communicated with at least 4 quarters notice. The best vendors provide guidelines that give customers predictability 2 to 3 years in advance.
The bottom line- can vendors deliver on such promises?
Let’s see which vendors can deliver on all 3 pillars. Recent financial analyst reports from investment houses (i.e. Merrill Lynch’s Kash Rangan w.r.t. Oracle and Merrill Lynch’s Raimo Lenschow w.r.t SAP) indicate a sharpening downward trend in revenue estimates, not only for Q4 2008, but also for FY 2009 and FY 2010. Software vendors under pressure to make margins will be forced to choose whether they are willing to take short term pain in stock valuations for long term gain in improving the vendor-client commitment or make their numbers by disenfranchising customers during a time of crisis by violating any one of the three tenants of maintenance pricing. Because many software vendors have blown through their Q1 2009 pipe in Q4 2008, new deals are scarce and maintenance revenues are the easiest targets for “guaranteed” revenue and price increases.
Your POV.
Are you being hammered in your existing maintenance arrangements? Do you feel locked in or do you feel your vendor is willing to work with you on deals? Feel free to share with me your experience. You can post here or send me a private email to rwang0@gmail.com.
Copyright © 2008 R Wang. All rights reserved.
3 comments | 
Print This Post | 
Email This Post | 
Subscribe to post comments
| Tags: , license policy, Maintenance, Microsoft, Monday's Musings, R "Ray" Wang;, software licensing and pricing, users, | Categories: ERP, Microsoft, Monday's Musings, R "Ray" Wang;, license fees, license policy, maintenance fees, users
|
[...] cost reduction drive enterprises to identify short- and long-term opportunities. These roles expect choice, value, and predictability in their vendor’s support and maintenance [...]
We’re a SaaS vendor, so maintenance isn’t an issue for us, per se. However, my experience is that everyone is looking for choice, value, and predictability from a software vendor, while at the same time all vendors are facing bottom-line pressures that make it difficult to deliver these values. Making your ‘numbers by disenfranchising customers during a time of crisis’ doesn’t seem like something anyone would own up to as a viable strategy, but cutting back on marketing or customer service, or failing to reinvest in product quality may amount to the same thing.
We offer 7 strategies for B2B marketing in a recession http://blog.marketo.com/blog/2008/06/7-strategies-fo.html . Strategy number 2, “Focus on your house list†is really pretty critical for vendors who depend on maintenance revenue, but this strategy will fail miserably for vendors who attempt to make their numbers at the expense of their customers.
We recently have been disappointed with the offer we received from SAP regarding Enterprise Support. We’ve lost choice from basic to premium. We don’t get much value as we run a very stable CCC and can do our own maintenance in a very cost effective manner in 4.7. The move to ERP 6.0 may not make sense because of the cost in maintenance paid for ERP 6.0. When will they have 3rd party options?