Who Says Support Has To Be Bundled With Maintenance?

About a decade back, vendors would offer support and maintenance as two separate line items on their contracts.  Support would run about 5 to 10% the license fee and so would maintenance.  Keep in mind, average support and maintenance fees were under 15% back then.  Here’s a quick primer on what was covered:

  • Maintenance.  Traditional areas include basic bug fixes, functional and performance enhancements, upgrades, backward compatibility, and legislative and regulatory updates.
  • Support.  Most requests fall in the technical support category.  Support cases typically include installation issues, integration questions, third product compatibility, and complex scenario resolutions.

Today, almost every vendor in the enterprise apps world (i.e. ERP, CRM, SCM, eCommerce, etc) has decided to bundle the two line items together. It’s now known as software maintenance and support and vendors charge between 18 and 28% of net price.

Microsoft Dynamics Uniquely Provides A Separated Maintenance And Support Option With Choice, Value And Flexibility

While many in the software industry have obsessed with locking customers into maintenance and support contracts, the Microsoft Dynamics team set out to differentiate the ownership experience around the key principles of choice, value, and predictability (see Figure 1).

  • Choice.  After the initial purchase, Microsoft Dynamics has offered customers the option to purchase maintenance and support separately.  This is unique to the industry for three reasons because customers:
    1. Choose whether or not to buy maintenance.
    2. Determine who they go to for support.
    3. Separate the technical support from the maintenance decision.
  • Value.  Microsoft’s maintenance plan bundles a series of customer friendly services that deliver value.  The include
    1. Unlimited acccess to eLearning.  Customers can get to any course at any time with their maintenance dollar.  There’s no requirement for expensive week long training academies.
    2. 24 hour self-service support. Microsoft’s invested in its self support community and has 1000 new users a month with 30,000 self-help posts to date.  Most questions can be addressed in the discussion forum or directly by an expert.
    3. 10 years of lifecycle support. Most vendors provide a 5 year plan with escalating costs in the 6th and 7th years.  10 years represents a reasonable life cycle for ERP.
  • Predictability.  Along with the 10 years of lifecycle support, Microsoft Dynamics will use the original purchase price as the basis of calculating future maintenance fees.  Users must stay current on enhancements to qualify.

Figure 1: Microsoft Dynamics’ Delivers Choice and Value In Its Support And Maintenance Offerings

screen-shot-2010-03-08-at-10320-am

The Bottom Line – Users Should Demand A Split In Maintenance And Support

Now’s the time to seek options in maintenance.  Shelfware reduction, third party maintenance (3PM), and contract re negotiations should provide some relief at the business level.   However, decoupled maintenance from support options opens up the customer base to internal and third party options.  Sticking with maintenance and not support may prove to be the best value (i.e. next to 3PM) and create a win-win between the vendors and customers.

The Bottom Line – Progressive Vendors Can Take Charge And Lead The Way.

Software vendors must reexamine their offerings to understand what customers need.  Should economic conditions worsen, more third party maintenance (3PM) options will emerge and force pricing pressures against today’s tired models.  Vendors must take action by phasing in or offering tiered maintenance offerings and minimal support

Your POV

Are you a Microsoft Dynamics customer?  Did you unbundle support from maintenance?  Are you looking at options to compare the vendors?  We’d love to hear your point of view.   Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Let us know if you need help with your enterprise apps strategy by:

  • Conducting an ROI on 3rd party maintenance options
  • Identifying cost reduction opportunities
  • Renegotiating your software contracts
  • Improving innovation via SaaS and other deployment options

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Related resources and links

20091008 Deal Architect – Vinnie Mirchandani “Third Party Maintenance Is Really 4 Decades Old”

20071120 News Analysis: Too Early to Call the Death of Third Party Maintenance

20090210 Tuesday’s Tip: Software Licensing and Pricing – Do Not Give Away Your Third Party Maintenance And Access Rights

20090709 Tuesday’s Tip: Do Not Bundle Your Support and Maintenance Contracts!

20090622 News Analysis: Infor Flex Reflects Proactive Maintenance Policy

20090516 News Analysis: Rimini Street Launches Third Party Maintenance for SAP

20080909 Trends: What Customers Want From Maintenance And Support

20080215 Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness

20090428 News Analysis: SAP and SUGEN Make Progress on Enterprise Support

20090405 Monday’s Musings: Total Account Value, True Cost of Ownership, And Software Vendor Business Models

20090330 Monday’s Musings: It’s The Relationship, Stupid! (Part 2) – Stop Slashing The Quality Of Support And Maintenance

20090324 Tuesday’s Tips: Five Simple Steps To Reduce Your Software Maintenance Costs

20090223 Monday’s Musings: Five Programs Some Vendors Have Implemented To Help Clients In An Economic Recession

20081012 Monday’s Musings: 5 Steps to Restoring Trust in the Vendor – Customer Relationship

20091012 Research Report: Customer Bill of Rights – Software-as-a Service

20090910 Tuesday’s Tip: Note To Self – Start Renegotiating Your Q4 Software Maintenance Contracts Now!

20090602 Tuesday’s Tip: Now’s The Time To Consider SaaS Software Escrows

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