The Real Deal: Andrew Nelson on Third Party Software Maintenance

This continues a series of guest columns from practitioners and bloggers I respect. The category - The Real Deal describes them well.

My readers know I have been writing for a while about the opportunity to lower enterprise application costs through use of third party maintenance vendors - or at least leveraging such vendors to beat down the software publisher's pricing.

So, it is natural I give air time to Andrew Nelson, President and CEO of TomorrowNow, currently the largest third party maintenance provider to PeopleSoft, J.D.Edwards and Siebel customers. Formerly an Andersen Consulting PeopleSoft consultant, he founded TomorrowNow, and it is currently a unit of SAP. As I wrote here, I hope SAP someday allows him to offer his services to its own customers...because he sure makes a compelling case below.

"As companies and government agencies crunch their IT numbers and become increasingly dollar-conscious, they naturally look for the best return possible for their software investment. Solid, dependable and economical support that keeps their software systems running smoothly is a key part of that financial equation, but sticking with the same old schemes doesn’t always support their future business needs or budget constraints. Many organizations have discovered that a third-party maintenance provider can provide software life extension, more choices, better control of their enterprise software destiny, and improved customer service — all at half the cost. 

Traditional software vendors’ annual maintenance contracts sustain mature and stable applications at a steep standard maintenance and support charge: As high as 22 percent of license fees. Only a portion of revenue from conventional enterprise software maintenance and support fees actually goes toward support. A large slice of the money is invested in the development of new generations of applications. This industry practice is a gravy train for software vendors, but makes less and less sense for customers operating on stable, functionally rich applications whose upgrade or re-implementation costs cannot be justified by the incremental innovation promised. Prematurely retiring an application may make sense for the vendor to lower its cost and push clients toward future releases, but that doesn’t equate to a good ROI for customers. Instead, a third-party vendor offers quality services at substantial savings, keeps application versions current and running smoothly until the customer chooses to retire them, and puts them in control of their future ERP roadmap. Organizations should consider these benefits of partnering with a customer friendly third-party maintenance provider that avoids expensive and unnecessary upgrades from the original software vendor.

Choosing a third-party provider, such as TomorrowNow Inc., also raises the customer-service bar. When considering maintenance services, an organization should ask, “Why would we stay with the software vendor when TomorrowNow is offering us better, more personalized service at half the cost?” Many companies and government agencies have realized the benefits of saving money while receiving better service and getting extended use of their existing enterprise systems. TomorrowNow supports hundreds of clients who use Siebel, J.D. Edwards and PeopleSoft software. We provide every customer a named, primary support engineer, proactive delivery of tax and regulatory updates, and 30-minute response by highly knowledgeable engineers — worldwide, 24 hours a day, 365 days a year— a proposition that goes unmatched by enterprise software vendors or other third-party operations.

It’s a slam-dunk decision for many: after cutting the costly ties to their software supplier, organizations can take half the money previously allotted for support fees and upgrade their hardware structures, database platforms or other aspects of their enterprise environment, or simply apply those savings back to the bottom line. In any case, the IT or applications management group ends up looking good.

An added bonus is that third-party vendors also help the entire industry by making enterprise software companies more accountable for the level of service they provide. By weakening the underpinnings of the last tech-industry monopoly, we give organizations more flexibility with their IT budgets, more time to fully evaluate their future software strategies and make the best possible decisions to meet their specific needs and goals."

Andrew can be reached at andrew_nelson@tomorrownow.com