Chopping Software Maintenance Fees

By David F. Carr  |  Posted 2006-08-15 Print this article Print

Companies are turning to third-party maintenance providers to support applications from PeopleSoft, J.D. Edwards and Siebel—the three enterprise software players recently acquired by Oracle. Here's why.

Eagle Family Foods purchased PeopleSoft's enterprise resource planning system in 1998 when the food manufacturer was planning a series of acquisitions.

As it turns out, Eagle didn't pursue those deals. But the PeopleSoft project gave Jeff Eshelman, vice president of information systems, an ERP system that he says more than met his needs. He wanted to stick with version 7.5.3 of the software, but encountered a quandary: To get support from Oracle—which bought PeopleSoft two years ago—he'd first have to upgrade the software.

"What we got most frustrated with over time was being told we need to move to the new release, or that's been fixed in the new release," Eshelman says.

Eshelman didn't buy the upgrade. Instead, he turned to TomorrowNow, a vendor that provides third-party support for PeopleSoft products.

As Oracle has swallowed up enterprise application vendors PeopleSoft, Siebel and J.D. Edwards in the past few years, a cottage industry of third-party maintenance vendors has sprung up—taking dead aim at customers of those acquisitions. Oracle did not respond to a request from Baseline to comment.

These third-party vendors include Rimini Street of Las Vegas; Conexus Partners in Greenwood Village, Colo.; and Bryan, Texas-based TomorrowNow, which was acquired by SAP in January 2005.

TomorrowNow provides third-party support for J.D. Edwards and PeopleSoft, both of which are now owned by Oracle. In May, TomorrowNow added support for Siebel, a vendor acquired by Oracle in 2005.

As an SAP subsidiary, TomorrowNow also helps customers of other enterprise software products as they migrate to an SAP platform, according to Andrew J. Nelson, TomorrowNow's co-founder and a former PeopleSoft executive.

Rimini Street, meanwhile, started with support for Siebel, and recently announced it would add support for PeopleSoft products. Its founder, Seth Ravin, is also a former PeopleSoft executive and a co-founder of TomorrowNow.

Companies are turning to such third-party maintenance vendors for an assortment of reasons, according to vendors, customers and consultants.

For starters, the third-party alternatives are frequently half the price of direct vendor support, according to a Gartner report prepared by analyst Alexa Bona and released in December 2005. However, Bona points out, there is risk associated with the alternative maintenance contracts because of legal challenges and retaliatory tactics by the enterprise software vendors.

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David F. Carr David F. Carr is the Technology Editor for Baseline Magazine, a Ziff Davis publication focused on information technology and its management, with an emphasis on measurable, bottom-line results. He wrote two of Baseline's cover stories focused on the role of technology in disaster recovery, one focused on the response to the tsunami in Indonesia and another on the City of New Orleans after Hurricane Katrina.David has been the author or co-author of many Baseline Case Dissections on corporate technology successes and failures (such as the role of Kmart's inept supply chain implementation in its decline versus Wal-Mart or the successful use of technology to create new market opportunities for office furniture maker Herman Miller). He has also written about the FAA's halting attempts to modernize air traffic control, and in 2003 he traveled to Sierra Leone and Liberia to report on the role of technology in United Nations peacekeeping.David joined Baseline prior to the launch of the magazine in 2001 and helped define popular elements of the magazine such as Gotcha!, which offers cautionary tales about technology pitfalls and how to avoid them.

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