Chopping Software Maintenance Fees - ' A Risk Worth Taking '

A Risk Worth Taking

Bill Leake, president of Austin, Texas-based Internet marketing firm LC Growth, says that's a risk he's willing to take. LC Growth purchased Siebel's sales force automation software earlier this year and is still covered by the vendor maintenance contract, which was included with the initial purchase. But Leake retained Rimini Street for maintenance, believing its support will help him stretch the life of the application over five to 10 years.

"With the major enterprise applications, the software is mature enough now that it's perilous to be on the absolute most recent version—because that's where all the bugs are," he says.

And Beekley Corp. of Bristol, Conn., a medical device manufacturer, is using Rimini Street as a transitional measure, as it plans to move from Siebel to Microsoft customer relationship management software.

Geris Papajani and Nick Carey of Beekly's information-technology team say they got much more attentive service from Rimini Street than they were ever able to get from Siebel, perhaps because they were a relatively small Siebel customer. Rimini Street "took care of issues that had been lingering for a long time," cleaning up the application database to make it run faster, Papajani says.

Although TomorrowNow has an obvious reason for not cannibalizing its parent company's maintenance business, that doesn't mean SAP is immune to this move toward third-party support. "Oracle, SAP or any other enterprise vendor must justify the value of their premium maintenance. If you are delivering innovation and value and can justify the premium cost, then great," says Nelson of TomorrowNow.

Besides savings, there are other factors to consider with third-party maintenance contracts.

Both TomorrowNow and Rimini Street support customizations that the enterprise has added on top of the standard product, something that's not usually provided by vendor maintenance contracts. They also patch and update the core software product; for example, they have released updates for tax and regulatory changes.

On the other hand, admits Rimini's Ravin, "The risk is that we don't have all the source code," so customers have to understand that "there are things we can fix and things we can't fix."