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Software license deals: Maintenance fee considerations

3/23/2012

Even as many IT departments face shrinking budgets, the cost of software support and maintenance is rising faster than the rate of inflation, according to Constellation Research. The IT research and advisory firm, which has significant experience in the realm of software contract negotiations, recently shared some tips for how businesses can save money despite rising fees related to software licenses.

Although it used to be standard practice for software license contracts to include separate, optional line items for vendor support and maintenance, these services are increasingly being bundled, according to Constellation. It may be beneficial to secure vendor-provided support and maintenance; however, Constellation advised businesses to consider third-party maintenance solutions.

Third-party maintenance can cost significantly less than vendor-provided maintenance, while still providing such essentials as bug fixes, performance optimization and tax and regulatory updates, Constellation stated. The downside to third-party support is that it does not include software upgrades or access to future versions. Still, Constellation stressed that third-party maintenance can be an effective way of freeing up IT dollars, and suggested that businesses advocate to maintain third-party maintenance rights when negotiating contracts.

For those companies that have already locked in software license agreements, Constellation suggested renegotiating support and maintenance fees on "shelfware," or licenses that have been acquired but are not being used.

In a 2010 article for Tech Dynamics, Forrester analyst Andrew Bartels made similar points regarding maintenance fees, and suggested that because older software tends to be more stable and require less support, vendors might be wise to consider a sliding scale pricing system, dependent on the maturity of the software in question. He said this might cost vendors money in the short term, but would encourage CIOs to invest in licensed software.