Dan Burger recently published article in “The Four Hundred” entitled “Third Party's A Charm For JDE Maintenance Contracts” provides excellent insight regarding outsourcing support for IBM i enterprise business systems. Dan makes these observations:
- Software maintenance costs are becoming an ever increasing problem for many companies as their IT budgets have shrunk. Within the IBM i community, Oracle JDE World applications have “become the lightning rod example.”
- Average software maintenance fees are 20 percent of the software licensing fee which translates into a doubling of the initial software investment every five years. “There's some serious money changing hands.”
- “When companies believe they aren't getting their money's worth, discussion between buyer and seller heat up.” A recent Wall Street Journal survey showed 58% of Oracle customers were dissatisfied with the maintenance costs and 42% were unhappy with the level of support. There is also the “sense that the company is leveraging its market strength and forcing customers to upgrade to products Oracle wants them to buy." The marketplace is ripe for third party support providers.
- While 40% of companies using JDE World are still on release 7.3 which Oracle is sunsetting, many plan to upgrade to the newest release (9.3) over the next 18 months and then switch to third party support. They believe this will meet their needs for the next 5 years while they enjoy considerable savings.
- “Third-party maintenance vendors provide a variety of options … [and] include such things as performance optimization … and customization support.” While third party vendors cannot provide Oracle developed upgrades and future releases, they can frequently save the customer as much as 50% of the cost of application support.
Based on conversations we have had with our customers, the statement that another IBM i software vendor has a similar strategy enhancing their legacy products to maximize maintenance revenue is misguided. We have been told this vendor is not enhancing their legacy products and instead pushing them to a few select products to maximize both license and support revenue.
I do wholeheartedly agree with the author that "there should be no surprise that events unfold the way we've been seeing them unfold.” Companies want value for their continuing investment in their enterprise business software infrastructure.
Read Dan Burger’s complete article at: http://www.itjungle.com/tfh/tfh042312-story05.html