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Posted by Ray Wang on March 24, 2009
Maintenance costs represent a major part of the software budget and
the largest growing source of revenue for software vendors. In fact,
an aggregation of the past four quarters of software vendor financial results
definitively demonstrates double digit declines in new license revenue,
even more exacerbated by the evils of currency flux from the strong
dollar for US based vendors. Not surprisingly, vendors are hard at work
vigorously protecting their 70 to 80% margin in maintenance revenues
just as clients and readers of this blog now zero in on this line item
as the major concession target during contract negotiations. Here are
five steps (i.e. A,B,C's to software maintenance) you need to do now*:
The bottom line - align your contract negotiations strategy with your product adoption strategy.
Successful negotiations will require these 5 steps. However, more
importantly, organizations should keep a current apps strategy and
product adoption strategy. Without these two key documents, lack of
visibility into the business case will lead to shortsighted
negotiations that fail to meet the true requirements of the business.
Sourcing, procurement, and vendor management professionals should
partner with domain experts who can provide third party, independent
and objective advice that will complement contract negotiations
strategy. Click here for more contract negotiation strategy tips.
Got more enterprise software contract negotiations questions? Set up a call with the inquiry team and ask for R "Ray" Wang.
What's your best practice in reducing maintenance costs? Post your
comments here or send me a private email to email@example.com.
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and look forward to your input!
*Caveats are as follows: 1) This does not constitute legal advice.
Please consult your legal counsel for an official opinion and wording.
2) This does not consider any procurement or vendor management rules
that must be applied to your enterprise. Please work with your vendor
management teams for compliance. 3) Contract negotiation support
provides insight into overall trends and price points. Benchmarks are
not provided as each user scenario is unique.
Copyright © 2009 R Wang. All rights reserved.
Reposted from http://blog.softwareinsider.org