An article recently published by Forrester "The Emerging Third-Party Software Support Marketplace: Questions and Answers" gives credibility to 3rd party support industry and outlines reasons CIOs are moving away from vendor application support. Ever-shrinking IT budgets combined with plans for new IT projects are causing many IT executives to look to reducing software support costs. The authors also note "vendors like Oracle and SAP have been enjoying up to 90% profit margin on maintenance revenue, an increasing frustration has developed that the costs seem to far outweigh the actual value being delivered."
In a poll conducted by Forrester respondents reported the reasons they are considering third-party support:
- Need to save money (62%)
- Unhappy with the quality of software vendor's support (21%)
- Software vendor has given notice to terminate support on our version of the software (9%)
- Other (9%)
Using a question and answer format, the article provides these benefits of considering a third-party software support organization versus the software vendor:
- Cost savings of 50% is a key part of many third-party business models
- Avoid forced march to unwanted upgrades
- Support for customized as well as core vanilla code
- Increasing responsiveness of support
- Can continue to buy new seat licenses and modules from vendor
- Ability to use third party as negotiation leverage with the vendor
Continued access to license keys is discussed noting keys "are a standard element of your perpetual license agreement [but] ... they are not part of the annual maintenance support contracts." The original intent of license keys for legacy software applications was never to force a customer to contract with the vendor for support. The keys were to ensure the software was running on the appropriate hardware or being accessed by a limited number of users. Some vendors like Oracle and SAP make keys readily available on their websites which is the case for the Oracle's JDE World application. But some PSGi prospective clients have found restrictive clauses in their master license agreements that need to be reviewed by legal counsel to ensure there is no breach of contract. Third-party support organizations boast hundreds if not thousands of customers so this obviously was not an issue for them.
The article concludes that "The world of software support has evolved. ... Third party support providers have delighted their customers by providing genuine choice as to who they use software and maintenance, as well as offering significant cost savings."