Sourcing / Outsourcing

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.
   
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Post-Slowdown, Offshoring Gets New Urgency - Industry leaders point out that start-ups looking at having centres in low-cost regions is an old trend. But what has changed now is the urgency with which companies are looking at this model. For start-ups, this model could save 30-40 per cent in costs, said industry experts 

US-based Sonoa Systems is among the few start-ups which did not resort to drastic cost rationalisation in the wake of the global slowdown. The company has had an offshore operational model since inception which helped manage its costs better.