October 8, 2014
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This was originally posted by Derek du Preez on computerworlduk.com

Customers of Oracle and SAP are benefiting from the presence of third party support providers in the enterprise software market, with research indicating that some are negotiating up to 25 percent off their steep maintenance fees.

Customers of Oracle and SAP are benefiting from the presence of third party support providers in the enterprise software market, with research indicating that some are negotiating up to 25 percent off their steep maintenance fees.

According to the latest research by industry analysts Constellation Research, the business model for software vendors relies on winning heavily-discounted upfront licenses, selling additional add-on modules and growing a perpetual stream of maintenance revenues.

It states that by year five of a software life cycle, a vendor will have worked out most bugs in the release and reduced staffing in research and development to a point where the profit margin for support and maintenance will have reached between 67 and 81 percent.

Consolidation in the software vendor landscape made it possible for the likes of SAP and Oracle to charge these prices. However, with the emergence of third party support providers, such as Rimini Street, which claim to reduce maintenance costs by at least 50 percent, this position of power is eroding.... Continue reading

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