Gartner® Predicts Continued Growth in Third-Party Software Support Market

Report outlines viable scenarios for third-party software maintenance and support for sourcing, procurement, and vendor management leaders.

In its latest report, “Market Guide for Independent Third-Party Software Support for Megavendors,” Gartner says third-party software support (TPSS) “can help keep budgets flat by eliminating the ongoing year-over-year software vendor maintenance and support increases when organization are challenged to meet cost-saving goals and initiatives.”

Third-party software maintenance (TPSM) is gaining ground among organizations that are looking for a more innovative approach to traditional megavendor support. TPSM combines responsive service and flexibility with considerable cost savings— up to 50% annually versus megavendor maintenance and support pricing.

While this substantial savings is what might initially appeal to organizations that move care of their IT estates to TPSM providers, more and more companies that transition away from megavendors, such as IBM, Microsoft, Oracle, and SAP, are discovering the benefits of the enhanced and expanded service offerings that are bolstering the growth in the TPSS market.

Gartner reports that “this market will continue to see the emergence of new TPSS providers and new and expanded service offerings from existing providers. The TPSS market growth continues to expand, exemplified by Origina’s June 2022 announcement adding mainframe software support services.”

With added benefits including things like license and audit consultation, enhanced cybersecurity protection, and one-on-one workshops with global IBM experts, third-party software maintenance is moving away from the traditional break-fix model into more of a strategic partner role, someone who can help extend the life and value of your estate.

Scenarios for TPSS growth

There are five common scenarios that Gartner believes will contribute to continued growth in the third-party software support and maintenance market.

1. Cloud migrations. When version upgrades are no longer needed during a cloud migration, Gartner says “TPSS providers can offer technical support for the customer-entitled version so organizations can realize the average 50% cost reduction.”

2. Migration to alternative vendors or solutions. Why pay a megavendor for full support when you’re moving off to another product? The report suggests adding third-party support in the mix when reviewing new vendors or alternate solutions to replace on-premises software products.

3. Low-value maintenance evidenced by low-frequency technical support tickets/incidents. Help desk and service desk technical support and incident tickets should be analyzed every six months to help determine the ROI of the value received versus the annual cost paid for vendor maintenance and support, according to Gartner. This includes frequency of support calls, type of support, severity level, resolution time, and results.

After that analysis, the organization recommends considering TPSS services “as an alternative for cost-saving opportunities” for low-value, low-incident software products in megavendor portfolios.

4. End-of-Support (EOS) announcements or notifications. Older versions of software can still be used for certain applications, but oftentimes megavendors won’t support them past EOS without additional fees and customized support agreements. This is a good time to talk to a TPSS provider. Third-party software maintenance companies often support older versions and allow you the choice to upgrade when you want to, not when the megavendor mandates.

5. Absent or expiring maintenance increase caps for price protection in contracts. Some contracts do not have any price protections in place, particularly three-to-five-year enterprise license agreements (ELAs). In these circumstances, there can be a risk of escalating maintenance and support costs or EOS announcements during the term.

If the price increase cap is higher than the current consumer price index rate, Gartner recommends evaluating TPSS services to compare their prices with those of the megavendor renewal proposals. This should be done six to nine months before contract expiration.

A ‘quick win’

IT leaders who take a close look at the impact of being dependent on megavendor maintenance and explore existing alternatives can turn the tide on years of software overspending. These companies are able to maintain all versions of their software solutions in a flexible way that support their path toward digital transformation.

Gartner agrees. “When third-party support is a feasible alternative, the significant software maintenance and support cost reduction opportunity can be a quick win,” according to Gartner.

Want to talk more about what third-party software maintenance can do for you? Schedule a call with Origina today.

Access your complimentary copy of the 2023 Gartner Report here.

Gartner, Market Guide for Independent Third-Party Software Support for Megavendors, 27 November 2023, Rob Shafer et al. 

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