Paul Willis comments on Frank Scavo’s blog
“To take up your point about maintenance, I’m surprised that yet again a representative of a large enterprise software vendor doesn’t take the opportunity to more forcefully defend the company.”
Then he blogs more extensively about it here – it is a bit SAP centric but he could be speaking for most legacy, on-premise software vendors
First let me me say it is ironic that Paul and Frank and I and others on our free blogs are debating the value of maintenance when software vendors spend 20, 30, 40% of their revenues in high-powered sales and marketing and corporations spend enough (though somewhat less than vendors) on IT, procurement and attorneys to manage that budget line item.
We are the dumb ones for charging nothing for analyzing those tens of billions in annual maintenance. While Paul and I ponder how to twist our business models, though, let me disagree with some of the points he makes on his blog:
a) SAP’s move to 22% is justified
It is opportunistic for SAP to say “we are getting on par with Oracle’s 22%”. SAP’s maintenance is typically calculated on a much higher application license cost base than Oracle’s - its 17% in many cases, normalized for comparable functionality is in dollar terms already higher than the 20% customers pay Lawson or 22% they pay Oracle. The belly aching about SAP costs we have heard for two decades is not just about project overruns. The base cost and shelfware is itself pretty pricey. So maintenance increase from 17 to 22% on that base just adds straw on the camel’s back.
b) Accept the vendor’s development plans – slow as they may seem
Hmmm. Let’s pick on one area - vertical applications. Remember all the exotic licensing metrics SAP and other software vendors dreamed up for vertical modules – number of students for higher education, number of meters read etc. Remember the “wall-to-wall” coverage promises? There are still huge chunks missing. So if software vendors want to get miserly on spending those maintenance dollars they collected on the incremental licenses let’s reset the clocks. Let’s refund the vertical licenses.
c) Support is insurance policy
I can see this argument. But then software vendors should be prepared to pay out for claims when their software does not work as promised. Even if it costs tens of millions. Game?
d) Don’t expect pricing based on components of support
All I can say is be glad you are not a major supplier to Walmart. They would tear down components and hand it back in a heap and tell you what you can expect to get for it. Oh, and btw tell you to share hotel rooms when you go to Bentonville. Since when did suppliers expect to keep savings from efficiencies and not pass them along?
I could go on and on. Somehow doing it for free when discussing 90% + margin maintenance just gnaws at me :)
