Third-Party Software Support: Pros and Cons

By Scott Rosenberg

Third-party support providers often promise enterprise software support for a lot less than vendors such as Oracle, Microsoft and SAP charge annually. This can be compelling because software update and license support (SULS) annual fees typically range between 18 and 22 percent of the licensing fee. But you should consider the hidden and not-so-hidden risks in switching to a third-party support structure, as well as benefits that can be achieved in well-defined circumstances.

Here are four main questions you should consider before making a decision:

1. Can third-party support fully replace vendor support programs?

In a word, no. When you go off the vendor’s enterprise SULS “reservation” for a third-party program, a number of conditions change:

·  The status of your software is effectively frozen. No further updates will be provided by the vendor, nor will you be entitled to any, including those required for regulatory compliance, security and other critical events.

·  License compliance must be maintained—an important consideration for subsequent hardware upgrades or environment changes.

·  Extended support offerings are no longer available to you.

·  You will no longer have access to technical assistance forums.

·  Advantages from changes in program bundling are no longer available.

·  Resuming vendor support can be expensive. For instance, a software vendor may charge reinstatement fees of up to 150% of the standard maintenance fees.

2. Will we really save 50 percent, or will we pay more in the long run?

Yes, you will save 50 percent … of the initial annual fee. Whether you pay more in the long run depends on your circumstances. If your company is growing, merging or upgrading hardware, the need to remain in licensing and regulatory compliance may lead you right back to the vendor’s SULS—and hefty reinstatement fees. The same applies if you must have access to software updates for any number of reasons.

3. What situations do merit third-party support consideration?

According to Forrester Research, there are at least two circumstances that warrant a close look at discontinuing vendor support in favor of third parties:

·  Upgrades are not important to you.  If you have a customized version of the software that may be a few releases behind, third-party support makes a great deal of sense.

·  If you believe your software deployment is set for several years with no need for updates, third-party support is a good option to help you when you run into minor bugs in the system.

We would add a third circumstance: third-party support as an augmentation to vendor support. For example, various Oracle partners can provide long-term engagements for hosting, outsourced database administration and performance tuning, as well as one-time or short-term events, such as migrations, upgrades, and temporary or emergency staff augmentation. This type of support—backed by the vendor—does not provide initial-fee cost reductions, but, depending on your circumstances, it might save your company time and money.

If you have decided to go ahead with some form of third-party enterprise software support, consider the following question.