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Posts Tagged ‘license returns’

Published on April 13, 2010 by R "Ray" Wang

Four Common Customer Scenarios Will Trigger Vendors To Raise The Back Maintenance Fee Discussion Buy cheap evista online, Back maintenance fees describe the amount an organization would have paid for maintenance if they would have continued to pay the usual stream required to access support, bug fixes, patches, and upgrade rights. As economic conditions have worsened, many organizations have turned to self-support, third party maintenance (3PM), or dropped support. Discussions with 43 enterprise software customers reveal four common scenarios (see Figure 1):

Scenario 1: Self supporting customers looking to upgrade to next release. Order zometa online cheap, Customers (44.19% n=19/43) in these scenarios typically run mature systems and are in businesses that do not face dynamic change . They stopped paying maintenance years ago and rarely make major changes to the system.
Catalyst: Something happens in the business and the need to upgrade arises.
Typical vendor response: Upgrades can only be provided to customers who pay for maintenance. Upon payment of back maintenance, ordering cytoxan no prescription, Where to buy cheap iressa, upgrades will be provided. In some cases, vendors also levies a penalty.

Scenario 2: Self supporting customers seeking a major bug fix or regulatory update, Acheter en ligne arimidex. Comprar evista de descuento, Organizations (27.91% n=12/43) in this dynamic have self-supported for years without incident but run into scenarios where their own teams can not resolve an issue.
Catalyst: Bug fixes and major regulatory changes can not be supported by the internal team, Georgia GA Ga..
Typical vendor response: Bug fixes and regulatory updates can only be provided to customers who pay for maintenance. Upon payment of back maintenance, patches and regulatory updates will be provided. In some cases, vendor also levies a penalty.

Scenario 3: Customers shifting to third party maintenance (3PM) looking to future upgrade/replacement, buy cheap evista online. Generic casodex, Those customers (16.28% n=7/43) who move to a third party maintenance provider and give up future upgrade rights often face threats from sales people that they will have to "pay dearly" if they plan to come back to the vendor.
Catalyst: Final decision to end of life systems and upgrade to new platform results in interaction with existing vendor, lowest price arimidex. Ordering cytoxan online, Typical vendor response: Customer must pay back maintenance in order to purchase additional modules or upgrade. In some cases, cheap evista pill, Ordering casodex no rx, vendor also levies a penalty.

Scenario 4: Customers not paying for maintenance with license contracts. Buy cheap evista online, More and more customers (11.63% n = 5/43) in newer areas such as CRM no longer pay for maintenance and support past the first year. With replacements every 4 to 5 years for CRM, some customers achieve a better ROI by avoiding the 5 years of maintenance. Why? Five years of maintenance at 20% is equivalent to the cost of the original license. Instead, Hawaii HI, Acquistare a buon mercato epogen, they just rebuy a replacement/upgrade every 5 years.
Catalyst: Replacement and full rebuy of new system, evista kopen. Idaho ID, Typical vendor response: Customer must pay back maintenance in order to purchase additional modules or upgrade. In some cases, vendor also levies a penalty.

Figure 1, För capecitabine online. Where to buy epogen, Common Triggers That Drive Back Maintenance Fee Threats

Customers Often Have More Leverage Than They Realize

Most organizations fear that vendors will carry out threats to charge back maintenance. Those vendors who subsidize license fees with maintenance to maximize Total Account Value (TAV) often threaten customers the most. Many organizations will cave-in to demands. Do not cave-in! In almost every scenario, expert contract negotiations often result in win-win propositions for both the customer and the vendor for a few reasons:

Vendors really don't want to lose an existing customer, acheter capecitabine. Despite the threats from vendors, customers who self support, move to third party maintenance (3PM), or opt out of support, find themselves with significant leverage. Free of the vendor, organizations in this scenario can make a clean decision because the technology typically is outdated, the cost of upgrade is close to the cost of reimplementation, and the organization has entered a new buying cycle. If a current vendor wants a customer to pay back maintenance on top of the new license fees, that vendor will find themselves at a price disadvantage with a newer alternative. Most vendors would rather win your business than lose a customer over back maintenance fees.

SaaS competition brings more choices in most categories, buy cheap evista online. Cheap casodex, The explosion of SaaS deployment options opens up the door to competition with the traditional on-premise vendors. In most cases, there are enough viable options to add competitive pressures. SaaS competitors can transcend existing platforms allowing for more choice in new markets. Organizations should introduce SaaS vendors into short lists in decisions to replace or add additional functionality to existing systems. Competition often results in the vendor backing down on their back maintenance fee threat.

Most customers have not bundled their service contracts. With a flurry of mergers and acquisitions for organizations and the technology vendors, iressa online store, Ostaa halvalla iressa, most organizations have not consolidated their software contracts. Separate agreements give organizations significant leverage when dealing with vendors because organizations can choose which applications and solutions to cut maintenance on. This power to slice and dice among the contracts provides tremendous negotiation advantage and a strong check and balance with vendors. Do not bundle your maintenance contracts unless significant advantages exist in new terms and conditions.

The Bottom Line For Users - Software Market Remains A Competitive Buyers Market For Now

Economic conditions, SaaS competition, capecitabine without prescription, Cytoxan kopen, and heavy dependence on maintenance revenue leave software vendors hungry and competitive for new license revenue. In markets with SaaS competition, customers continue to win concessions in license and maintenance fee reductions. Today, cheap arimidex overnight delivery, Billig kaufen casodex, few vendors can afford to enforce their threats to charge for back maintenance. With a high likelihood that current conditions will continue, its would be unlikely to assume that vendors would give up the opportunity to win license revenue by charging for back maintenance. Work with a contract negotiations expert with applications strategy experience for the best results. Avoid contract negotiators who do not understand vendor product road maps or hide behind revenue recognition excuses.

Your POV

Has your vendor threatened back maintenance? Should you have rights to Third Party Maintenance (3PM) ? Do you feel its okay for your vendor to prevent you from access? What's a fair amount to pay for maintenance? Add your comments to the discussion or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

Please let us know if you need help with your contract negotiations and maintenance renegotiation. Here’s how we can help:

Assistance with vendor threats of back maintenance

Crafting your next gen apps strategy

Contract negotiations support

Free market evaluation to identify contract cost savings

Related resources and links

Take the new and improved survey on 3rd party maintenance

20100222 Monday's Musings: Why Users Should Preserve Their Third Party Maintenance Rights

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

20090504 News Analysis: Oracle Waives Fees On Extended Support Offerings

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

20090912 News Analysis: Siemens Cancels SAP Maintenance Contract

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

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Published on February 22, 2010 by R "Ray" Wang

Order cheap iressa online, Apps Users Seek Third Party Maintenance For Cost, Value, and Service

Updated surveys from inquiries, client conversations, and user group meetings show a 113.8% increase in interest in third party maintenance (3PM) services from Q3 2009 to Q1 2010 (see Figure 1). Key factors stem from (see Figure 2.):

Continuing cost pressures. Louisiana LA, Budgets continue to be at flat or have been reduced. Organizations must do more with less. Add pressures to innovate, CIO's must find fat without trimming bone.

Gaining minimal value in maintenance services, West Virginia WV W.Va.. Buy arimidex online legally, Most felt they were paying too much for too little. An 8 point jump reemphasized the issue with a lack of tiered offerings.

Declining plans to upgrade. Worsening economic conditions from Q3 2009 to Q1 2010 led a 27 point increase in interest in 3PM. Expect many respondents to change their point of view (POV) as economic conditions improve.

Expecting better service, cytoxan ordine on-line. Kjøpe billig epogen, Service continues to play a key factor in decisions to go to 3PM. Over 60% of respondents had experienced poor levels of service.

Slowing pace of vendor innovation. Greater than half of respondents believe their vendor has been too slow to deliver new capabilities, order cheap iressa online. These include SaaS deployment options or key functionality in areas such as strategic HCM and social CRM.

Disliking the vendor, Maryland MD Md.. Buy iressa, About 1/3 of the survey respondents have bad experiences with their vendor. Many times it comes from sales person or support rep experiences.

Delivering self support. Almost 30% of respondents already provide their own support. These organizations have no need to pay maintenance when they are doing all the work.

Figure 1, order arimidex without prescription. Order capecitabine online cheap, Interest in 3PM grows 113.8% over 2 quarters.

Figure 2. Order cheap iressa online, Cost Pressures, Value, And Decision Not To Upgrade Drive Current Trends to 3PM

Limited Options Exist For Most Enterprise Apps Customers

Of the 101 respondents in Q1 2010 interested in 3PM, Oracle (88.1%) and SAP (76.2%) users expressed the greatest interest in seeking independent services (see Figure 3). Over 80% of the users were from large companies greater than 1000 employees across the globe. Most SAP users surveyed have mixed environments with Siebel, JD Edwards, and PeopleSoft joint installations. Unfortunately, very few public options exist for sole SAP users (see Figure 4). For example, SAP customers can only turn to Rimini Street. Oracle customers on PeopleSoft, JD Edwards, and Siebel also have limited choices with Rimini Street, netCustomer, and Spinnaker among the options. IBM, Infor, Lawson, Computer Associates, Epicor, Microsoft Dynamics, Oracle E-Business Suite and database customers have no options. (Note: This data may not be completely statistically significant given the sample size of 240, but hopefully it provides some directional input.)

Figure 3. Oracle And SAP Users Drive Interest In 3PM

Figure 4, Illinois IL Ill.. Cheap zometa online without prescription, Very Few Public Options Exist For Customers

The Bottom Line For Users - Users And User Groups Must Band Together To Guarantee 3PM Rights. Don't Take These For Granted, buy evista online. αγοράζουν online arimidex,

Although the latest surveys show a 17 point increase in the belief that 3PM is a right, this right is under fire by big vendors such as Oracle who have taken legal actions against 3PM providers for improperly (i.e, farmacia evista barato. TomorrowNow) and allegedly (i.e, order cheap iressa online. Um casodex online, Rimini Street) violating intellectual property rights. If providers have violated such laws, Oracle rightfully should defend its positions and those providers be punished. However, cheap gleevec tablet, Epogen pill, there's a lot of money at stake. For most vendors, maintenance represents 50% to 80% of their revenue stream. Consequently, iressa without a prescription, Nebraska NE Nebr., users and user groups have a responsibility to:

Demand that their contracts include provisions that protect their right to 3PM

Require vendors to work out rules on how 3PM providers can deliver services without violating software IP provisions

Seek anti-trust class action with the US DOJ (i.e. Christine A, cheapest zometa price. Washington WA Wash., Varney) and the EU Compeition (i.e. Joaquín Almunia) against software vendors who hinder 3PM providers from providing services

Users and user groups must vigorously defend their positions in contracts and legal action or lose this right. Failure will result in a continued software maintenance monopoly. Success will ensure market competition and renewed innovation. Attention: OAUG, District of Columbia DC D.C., Order epogen online, Quest, and SUGEN leadership your members need your help, Hawaii HI.

Figure 5. A Growing Body Of Users Believe 3PM Is A Right

The Bottom Line For Vendors - Proactively Address The Issue Or Expect A Groundswell Of Activism
Order cheap iressa online, SaaS, subscription pricing, 3PM, and the economy provide a confluence of forces that will continue to attack maintenance revenue streams. Many legal cases have been fought over this issue including IBM vs Amdahl and Geac vs Grace Consulting. SAP's failed attempt to convince customers on the value of Enterprise Support led to a public relations disaster and a factor in the resignation of their CEO. The result - many vendors considering price hikes held back. In fact, some savvy software vendors retooled and restored the client -vendor relationship by:

Offering more entry points and tiers to support options. Ostaa halvalla evista, The three pillars of software maintenance and support policies still apply. However, several vendors are now offering more tiers of support as lower entry points. Two vendors have finalized plans to offer just the bare bones legal and regulatory updates. Other vendors have made it easier to come back with maintenance amnesty plans.

Providing flexible maintenance policies. Vendors who change rigid policies have experienced success among customers. Some Both Infor through Infor Flex and Micrsoft Dynamics allow like for like swap credits to migrate between existing products.

Renegotiating existing terms. Some vendors are helping clients meet the realities of the current market conditions. Big on the list is helping clients address shelf ware without repricing of contracts. For clients who paid full maintenance on software that’s at least 4 years old, some vendors are offering to reduce up to 20% of the overall licenses not in use. This leads to lower maintenance revenue but engenders good will among key clients. Further, several vendors have allowed clients to apply credit towards another module as an alternative.

Delivering amnesty programs. Several vendors have allowed customers to return to maintenance programs after years of not paying. Such programs play a key role in helping customers upgrade but should be used sparingly as customers may become accustomed to this practice.

Creating better peer forums to share information. Almost every vendor surveyed has a program to improve the online support capabilities. Applying Social CRM use cases, user generated content in peer forums tops the list of initiatives. Other plans focus on sharing data on benchmarks, operational metrics, and best practices.

Assisting with vendor financing, order cheap iressa online. Clients seek access to financing, especially many in the mid-market who’s credit lines have been zapped. Microsoft has led the charge by providing 0% financing for its Microsoft Dynamics ERP and Microsoft Dynamics CRM Customers. Other vendors such as IBM, Infor, Oracle, SAP, Sage also offer vendor led financing programs that include hardware, implementation, training, and other services.

Lowering cost of usage and ownership. Though tops on the list as a conceptual practice, most vendors will need to roll out such initiatives over the next 24 months. A few notable exceptions include Agresso with its VITA architecture which allows customers to rapidly make business and UI changes, Microsoft Dynamics customers who report back significantly lowered implementation and training costs compared to most vendors, and Epicor customers who report significant productivity gains with Service Connect. SaaS customers already experience such gains.

Your POV

Take the new and improved survey on 3rd party maintenance and 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

Please post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.

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

20090504 News Analysis: Oracle Waives Fees On Extended Support Offerings

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

20100114 News Analysis: SAP Revives Two Tier Maintenance Options

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

20090912 News Analysis: Siemens Cancels SAP Maintenance Contract

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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Published on January 5, 2010 by R "Ray" Wang

High Cost Of Ownership And Changing Requirements Drive SAP Users To Seek Optimization Solutions

As users await SAP to regain its mojo (see Dennis Howlett's post) and implement it's "Voice of the Customer" strategy Buy cheap gleevec online, in 2010, users must continue to reduce their cost of ownership and complexity (see Figure 1). In addition, rapidly changing business requirements require some users to seek SaaS alternatives, additional point solutions, and extensions.

Figure 1. Cost Reduction Top of Mind for SAP users

Consequently, vendors providing SAP optimization and extension solutions represent one of the fastest growing parts of the $78.7B (2009 Altimeter Group estimate), Illinois IL Ill., 850,000 person strong SAP service partner and developer ecosystem. SAP users already embrace many of the solutions from vendors on this inaugural SAP Optimization List as part of their business value oriented apps strategy. The living list covers seven areas including:

application extension and usability;

application life cycle management;

archiving, storage, buy cheap gleevec, and data management;

license management and optimization;

Microsoft Office integration;

third party maintenance; and

virtualization

1. Application Extension and Usability

Users often complain about the poor usability of SAP solutions. These solutions allow users to change their user experience with SAP. In some cases, Order arimidex, the solutions provide composite app creation capabilities in other tool sets to inter-operate with SAP.

Adobe - provides interactive forms for the SAP environment in both an off-line and on-line deployment. Submitted forms are then entered into SAP. Forms can include validations and other secure features.

ERP-Link - allows users to extend the SAP environment for business intelligence, document management, content management, Connecticut CT Conn., and composite application creation using Microsoft tools. The i_Net platform creates SAP-Microsoft interoperability.

GuiXT - provides users with the ability to deliver customized user interfaces in SAP applications. GuiXT is often used by clients to simplify screens and user flows without impacting SAP code.

2. Application Life Cycle Management

Whether it may be instance consolidation, upgrades, test data management, or performance planning, these vendors ease the process of managing the SAP application life cycle, buy cheap gleevec online.

Hayes Technology - assists customers with replicating production application data for dev, Buy epogen overnight delivery, testing, and training environments. Gold Client allows organizations to replicate the data sets they need in SAP configuration, master data, and transcational data.

Hyperformix - builds on SAP internal monitoring capability, αγοράζουν φτηνά zometa. Organizations gain a performance monitoring tool that identifies hardware, infrastructure, Virginia VA Va., and architecture optimization opportunities.

Intellicorp - provides an artificial intelligence based optimization solution called Live Compare that compares version of SAP for use in testing, upgrade planning, and other life cycle activities. The solution helps clients understand their pre and post environment.

Panaya - delivers a SaaS based optimization tool for SAP upgrades, Iowa IA, enhancement packages, and ABAP code cleansing. Customers generate a code analysis to determine differentials between versions. The tool proactively tells user what will break, Rhode Island RI R.I., how to fix it, and where to test.

Tidal Software - optimizes the allocation of SAP support resources through a root cause analysis methodology. Performance, IT Process, and Workload automation solutions address both day to day and upgrade scenarios such as a system refresh.

West Trax - uses a benchmark tool based on over 300 clients in 13 industries to determine system optimization opportunities for upgrades and consolidations. KPI Scan, iressa online cheap, KPI Optimizer, and KPI QA help organizations identify opportunities, Lowest price arimidex, make suggestions, and assist with compliance.

3. Archiving, Storage, cheap gleevec from canada, and Data Management

EMC - provides content management and archiving solutions to support compliance requirements. Other capabilities include cloning, backup, Kopen goedkope casodex, and recovery, and information protection.

IBM Optim - delivers a suite of integrated data management solutions that includes data privacy, test data management, archiving, ordering gleevec online without prescription, retention and E-discovery, and upgrade consolidations.

4. License Management and Optimization
Buy cheap gleevec online, Solutions in this category focus on helping clients manage their license usage. Many large enterprises lack the understanding of how much shelfware may be in production. In addition, the used software market provides users with opportunities to unload or acquire older releases of software. Rhode Island RI R.I.,

Flexera (formerly Acresso, Macrovision) - helps clients with a software solution to understand usage, ensure compliance, centralize updates, buy evista without prescription, predict future demand, and improve contract negotiation leverage.

SUSEN Software - provides a market place to buy and sell used software or shelfware.

UsedSoft - supports a market place to buy and sell used software or shelfware.

5. Cheapest zometa in the world, Microsoft Office Integration

Organizations require easy ways to leverage Microsoft Office as an interface into SAP. Common scenarios include Outlook, Excel, Access, and Word integration, köpa gleevec online.

SAP Duet - represents a solution in joint partnership between Microsoft and SAP to provide interoperability. Current users complain about the slow pace of innovation and high cost. A new version addressing these issues will be out in 2010.

Winshuttle - facilitates data exchange between SAP and Microsoft Excel or Access. Winshuttle's data management tools automate data entry, Price of gleevec, data download, and reporting tasks for the entire SAP BusinessSuite 7.

6. Third party maintenance

Customers seeking relief from maintenance choose solutions that provide maintenance, tax updates, and regulatory changes for often half the cost of existing SAP maintenance prices. The clear leader in the market is Rimini Street though some other system integrators have been quietly providing such services, buy cheap gleevec online.

Rimini Street- delivers maintenance options for SAP customers who do not seek to upgrade but would like to keep their existing systems up to date with tax, compliance, cheapest capecitabine in the world, and other break-fix issues. Rimini Street's charter program has met significant success with over 100 client cases for SAP customers.

Your System Integrator of Choice - The recent Siemens SAP maintenance contract negotiations revealed that other vendors such as IBM and HCL were bidding for the maintenance business. Many SoftwareInsider readers have shared with us that many system integrators, especially those in Europe provide such services.

7. Farmacia epogen barato, Virtualization

Virtualization allows organizations to consolidate server infrastructure costs for development, testing, training, and production environments, buy arimidex no rx.

EMC - provides virtualization solutions that include high availability (HA), backup and recovery (BR), Ohio OH, and cloning.

VMWare - reduces an organizations physical infrastructure footprint with its solutions. VMWare provides additional solutions that deliver high availability (HA) and disaster recovery (DR). In addition to cost savings, many Software Insider readers report performance improvements.

The Bottom Line - Lots Of Proven Solutions, Expect More Details In Future Friday's Features

Over the course of the next 6 months, we will be profiling many of these vendors. Key questions that will be answered:

What's the appropriate use case?

What other customers have used these solutions?

What are sample ROI's achieved?

Meanwhile, let's see what news, programs, and innovations develop at SAP's Field Kickoff Meeting (FKOM 2010) the third week of January.

Your POV.

Have you worked with any of these vendors? Feel free to share your experiences. Am I missing anyone? This list will be continuously updated so please share with us your thoughts. Feel free to post your comments here or send me an email at rwang0 at gmail dot com or r at softwareinsider dot org.

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Published on October 6, 2009 by R "Ray" Wang

Free Software Gimmicks From Some On-Premise Vendors Only Address The License Cost Issue
Order iresa, Recently, readers and clients have been approached by on-premise vendors offering free software modules to incentivize new license purchases. However, free should not be confused with the Open Source (i.e. Freeware) movement, iresa, Irresa, where source code is provided with minimal copyright restrictions. Free should not be confused with any other obligations upon receiving license to that software. Free should not be confused with... well - free! In fact, iresa, Irresa, a closer evaluation of free software should include the following 9 test questions:

Are you required to purchase a minimum amount of some other module?

If you are required to buy a minimum amount, what's the discount off list for that required module?

Could you get the paid module on its own for less than the discount?

Could you get the free module on its own for less than the discount, iresa. Irresa,

Do you have to pay maintenance on the free module?

What value will be assigned to the software licenses when maintenance is calculated?

Do you get a discounted value for the maintenance on the free software license?

Can you return the free software without any charges?

Can you trade the free software for other products.

The Bottom Line - Calculate The Total Account Value (TAV) When Comparing Software Ownership Costs

Total account value (TAV) provides a methodology to calculate the true cost of ownership over a period of time, irresa, Iresa, typically 10 years. TAV represents what your worth to the vendor and your total costs. Components for a side to side comparison should include the following 10 elements:

License fees

Maintenance fees over a fixed period of time (e.g. 10 years)

Implementation costs

Patching, irresa, Irresa, bug-fixing, and upgrade costs

Testing costs

Training costs

Internal support-related staffing costs

Hardware or hosting costs

Retirement costs

Cost over-runs and that miscellaneous bucket

Use this methodology to compare costs as you figure out your enterprise strategy. This includes total account value cost comparisons such as:

Vendor X vs Vendor Y vendor selection

SaaS versus On-premise ongoing- costs

Third party maintenance versus extended support

Your POV.

Did you really think you'd get free software? Have you done a comparison of your existing costs versus scenarios for a new apps strategy? Need some guidance on TAV? Feel free to post your comments here or send me an email at rwang0 at gmail dot com, iresa. Irresa, *standard disclaimers apply. always check with your legal counsel and procurement experts before taking any action with your vendor contracts.

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

Published on September 1, 2009 by R "Ray" Wang

Labor Day (US Holiday) traditionally marks the end of summer BBQ's, the beginning of the fall conference season, and yes, the time to begin a review of your software maintenance contacts that expire end of year. As clients prepare for this seasonal ritual, a few trends in 2009 should set the stage for negotiations:

Continued weakness in the economy. Vendor revenues continue to decline as new license sales drop and vendors become more dependent on support and maintenance revenues. Customers looking to upgrade or commit to new apps can expect vendors to be more generous on the support and maintenance front.
Dated and inflexible architecture of legacy applications. Change in business models, workplace dynamics, and macro economic conditions apply new pressures to aging systems purchased pre-Y2K. Customers seek paths to upgrade but are limited by economic pressures.
Vendor awareness of customer discontent with existing support offerings. Customers now seek to understand what value vendors deliver in their support and maintenance agreements. Many vendors have proactively responded by improving service or making appropriate concessions.
Growing acceptance of third party maintenance (3PM) options. Vendors such as Rimini Street and Spinnaker have proven to the market that they can deliver 3PM to an array of ERP applications. Cutting maintenance fees by 50% or more can free up funds for innovation or pay for the next upgrade.

Align your apps strategy before negotiating contracts - do your homework Contract negotiations strategy should be planned in conjunction with an overall apps strategy. Begin the process 2 to 3 months in advance. Make sure the teams have the proper incentives in place. Take the following steps as you prepare for your maintenance renewals:

Assess current usage of maintenance and support
Begin apps strategy planning to determine product adoption road map
Conduct an internal license audit.
Determine extent of shelf ware.
Ensure that maintenance contracts are not bundled
Followup with your sales rep

The bottom line - follow the seven simple steps to successfully negotiating software contracts.

Ensure that the right team is in place
Identify the organization’s key business drivers
Determine the product adoption plan
Consider contract strategy implications of the software ownership life cycle
Align contract strategy with product adoption
Identify leverage points
Prioritize key contract objectives

Your POV Looking to hear your best practices with software maintenance contract renewals.

Is your maintenance contract up for renewal at the end of the year?
Do you need help putting a strategy in place?
Have you conducted an apps strategy assessment?
Would you like to break free from your vendor but don't know what options exist?

Tuesday’s Tip: 3 Approaches To Return Shelfware

Published on July 21, 2009 by R "Ray" Wang

Declining demand and diminishing output increase the pressure for enterprises to reduce their software license maintenance costs. As part of a larger enterprise apps strategy, shelfware reduction provides an area for significant cost savings. However, shelfware reduction is often hard to achieve because many vendors impose:

Enterprise wide agreements. These "all you can eat" agreements incentivize customers to buy more than they need at a "good" discount. Yet, the end result is the payment of maintenance on non deployed apps (a.k.a. shelfware").
Repricing clauses. Many contracts contain language that impose list price recalculations when users choose to return their licenses to the vendor.
Bundled contracts. Contractual language often prevents clients from unbundling their software as needed. In addition, vendors have initiated focused programs to bundle licenses.

The bottom line - apply three shelfware maintenance fee reduction techniques Craft a win-win strategy based on your product adoption requirements and overall contract negotiations strategy. Three proven techniques in order of improving win-win shelfware reduction scenarios:

Return unused licenses. Vendors agree to take back licenses and proportionately reduce maintenance costs. Customers lose future rights to those licenses.
Park unused licenses. Vendors agree to hold unsued licenses and not charge maintenance. Customers still have rights to the licenses and will pay for maintenance when licenses are deployed
Apply credit to purchase of new licenses. Vendors agree to assign a value to shelfware. Credit on used licenses will be applied to future purchses. Customers lose rights to the original software but gain rights to new software and functionality.

Your POV. Having issues with returning shelf ware? Which approach have you tried? Ready to share with us your experiences to date? If you need help with your SAP, Oracle, Infor, Lawson, Microsoft Dynamics, or other enterprise software contract, send me a private mail and we can assist with a contract negotiations strategy that aligns with your apps adoption strategy. You can post here or send me a private email to rwang0 at gmail dot com. Copyright © 2009 R Wang. All rights reserved.