Dealing With Vendor Threats To Charge For Back Maintenance Fees

Tuesday’s Tip: Dealing With Vendor Threats To Charge For Back Maintenance Fees by R "Ray" Wang

Four Common Customer Scenarios Will Trigger Vendors To Raise The Back Maintenance Fee Discussion

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:

1. Scenario 1: Self supporting customers looking to upgrade to next release. 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, upgrades will be provided.  In some cases, vendors also levies a penalty.
2. Scenario 2: Self supporting customers seeking a major bug fix or regulatory update. 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.
   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.
3. Scenario 3: Customers shifting to third party maintenance (3PM) looking to future upgrade/replacement. 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.
   Typical vendor response: Customer must pay back maintenance in order to purchase additional modules or upgrade. In some cases, vendor also levies a penalty.
4. Scenario 4: Customers not paying for maintenance with license contracts. 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, they just rebuy a replacement/upgrade every 5 years.
   Catalyst:  Replacement and full rebuy of new system.
   Typical vendor response: Customer must pay back maintenance in order to purchase additional modules or upgrade.  In some cases, vendor also levies a penalty.

Read the full article at A Software Insider's Point of View