"Our Take" - Maintenance Fees on the Rise

(Past Editions by: Date, Title, Topic)

 
About "Our Take" 
"Our Take" is a collection of daily vignettes covering a wide range of CRM topics. It's an attempt to add our own spin to the world of CRM. We will use the column to share our perspectives, opinions, epiphanies, web nuggets, or quite frankly anything that moves us. Get ready to expect the unexpected. And, don't be shy about sharing your thoughts.
 
 
10/17/06 - Maintenance Fees on the Rise
According to a presentation made by the folks at Gartner, we can expect maintenance fees for software to increase in the next few years. They project current annual rates equal to 18% to 22% of the cost of the software could increase to between 22% and 30% by 2010.
 
Why? The simple answer offered by the analysts is, "Because they can." In fact, they are quite certain this will happen and believe that legislation may be one way to stem the trend. Rising fees are an indication of a lack of competition.
 
I agree that vendors will do it if they can get away with it. But I still believe there is enough competition to keep maintenance fees in line. You can now acquire Software-as-a-Service solutions that offer an alternative to paying maintenance fees. Perhaps there is a lack of competition for the installed base of large installations where switching costs due to integration and customization is quite high. Are you locked in?
 
Gary Lemke, Publisher
(Share your thoughts)
 
10/18/06 - Maintenance Fees on the Rise - Part II
Yesterday, I shared Gartner's prognostications on software maintenance fees. In short, they believe annual maintenance fees are on the rise and could go up to 30% of software license prices by 2010.
 
From my perspective, companies purchasing CRM solutions have leverage to negotiate favorable maintenance fees due to adequate competition so I don't see that happening for many organizations. However, I believe Gartner doesn't make risky predictions that don't have a high probability of coming true. I think I know why.
 
In another discussion, one analyst was quoted as saying, "If you don't stay up on (Oracle, Siebel) upgrades, you could end up in a very scary place." So unless you have negotiated fixed maintenance fees for your enterprise level CRM solutions, you might need to add a few more bucks to your budget. Do you sense a rise in maintenance fees?
 
Gary Lemke, Publisher
(Share your thoughts)
 
10/19/06 - Maintenance Fees on the Rise - Part III
We have been talking about the potential for software maintenance fees to rise in the upcoming years (past columns: Part I; Part II). In short, Gartner predicts annual maintenance fees are on the rise and they could go up to 30% of software license prices by 2010.
 
One reader wrote, "We have one vendor who has tried to run up our maintenance every year over the past few years. Each year, we have had them bring the invoice back in line with our other maintenance costs. We don't mind paying a reasonable price, but we will not be gouged. Since this has occurred three years running, we are looking to replace their product."
 
No one likes the rules of game changed on them while the game is still in play. There may be good reasons for changing maintenance fees but if they are not understood by the one writing the check, loyalty can suffer. Tomorrow, I'll share with you a vendor's perspective.
 
Gary Lemke, Publisher
(Share your thoughts)
 
10/20/06 - Maintenance Fees on the Rise - Part IV
If you have not kept up with the column this week, please take a moment to read the three preceding columns. As promised, today I'll share a vendor's perspective on maintenance fees.
 
Consider this: "Some clients are very difficult to do business with and force higher fees on themselves. They are so disorganized that it takes ten meetings to accomplish something while for other organizations it only takes one. If you want fee negotiating power...don't threaten to leave. Consider how you can be a low maintenance customer. Respect goes a long way."
 
It would be nice to price maintenance fees on a usage basis to align costs and prices. Unfortunately, the industry model is more like insurance where everyone pays an average. Some will pay too much for what they get while others will pay too little. Is there anything that we can do to change that?
 
Gary Lemke, Publisher
(Share your thoughts)