How Third-Party Software Support Avoids Evil Licensing Tricks

Procurement and Vendor Management  •   3 mins read

Megavendors often employ evil tricks to keep customers locked into their maintenance contracts – but a 3rd party support provider can help. Software licensing is a notoriously complicated discipline. With server licenses, client access licenses, mobile licenses, and per seat, per processor, per socket pricing models, it’s little surprise many businesses feel like they are getting a raw deal.

There’s more to consider than the base license cost too. IBM charge an annual maintenance fee, guaranteeing support, patches and updates for the duration of the agreement. Annual maintenance will start off costing around 20% of the original purchase price. Fast forward 8-10 years and often your total IBM software budget is just on maintenance.

Meeting the challenge of the Cloud

Hosted applications with their subscription-based pricing model are attractive for customers because they help to reduce capital expenditure. Instead of a massive up-front investment in a new platform (and associated hardware to run it), software as a service (SaaS) allows customers to pay only for the resources they use, when they use them.

Obviously, this is hugely attractive for customers, and it does provide some recurring revenue for the software vendor. But when shareholders clamour for increased profits, big-ticket sales of new licenses used to be the easiest way to meet those demands. But what can the Megavendors do now?

Not just the Cloud

It’s clear IBM is having real challenges. Almost all revenue lines are in decline. It has struggled to find a role in the SaaS world and audits and annual software maintenance fee increases can only last so long. Even trying to sell five-year SaaS deals upfront is still only robbing Peter to pay Paul!

More for less

An annual raise in maintenance costs could be easily justified if the quality of service received also increased. Or if increases were calculated based on the number of support calls raised in the previous year.

But the reality is that increases are apparently arbitrary – the costs just keep going up regardless. And when it comes to mature, stable platforms, the volume of support calls is relatively low. So you, the customer, end up paying more for less.

Trapped in the IBM upgrade cycle

Perhaps most evil of all is the way in which IBM uses software maintenance as a way to push customers into a perpetual upgrade cycle. As products reach the end of their defined lifecycle, IBM offers a stark choice: pay to upgrade, pay for lavishly expensive “custom” support for the end-of-life application, or face losing any kind of support coverage at all.

In effect, IBM employ fear to push customers into upgrading perfectly stable, well performing applications, regardless of whether the new system delivers any significant benefits. On top of the all the new licenses, customers will also be expected to renew their maintenance contracts for a further three to five years. You may get some kind of sweetener in the form of per-unit license discounts, but any monies lost will be recouped through maintenance increases in successive years.

IBM’s balance sheet looks good – yours not so much.

Third-party maintenance – your way out

For businesses wanting to maintain stability and continuity, the only choice is to pay IBM’s ransom for a custom support contract – if they even offer one. But there is a better way – a third-party maintenance agreement.

By moving support away from IBM, your business can reclaim control of its applications. A third-party provider like Origina will support your “outdated” software, even after IBM have declared end of life. Which instantly relieves the pressure to constantly upgrade and helps you escape the evil tricks played by software vendors.

To learn more about third-party support for your IBM applications, and how you could save up to 50% on your maintenance costs, please get in touch.

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