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Sunday, March 25, 2007
Enterprise Software Customers & Need For More Maintenance Choices
The Oracle-SAP imbroglio is opening up discussions at different levels. While,I said issues like this may help smaller vendors to sneek in with new offering when the big vendors get embroiled in legal issues( am not for a moment supporting in any form any illegal/unethical activities), Vinnie comes out questioning the maintenance revenue stream of product vendors.
“During the PeopleSoft takeover battle, the DOJ tried to stop Oracle on antitrust grounds. It chose to define the software market very narrowly and Oracle easily proved it was not being anti-competitive. This time around the Feds should use maintenance as the filter. Oracle (and other software companies) have an overwhelmingly dominant position around that revenue stream around their software. He points out that the government action against IBM in 1969 led to the formation of today's software industry. And it has been a glorious one. No reason why similar action today against the software industry will not spawn new services and software options - and make the maintenance from the software publishers themselves much better value".
Vinnie – completely agreed. besides the US government, the EU and some other asian government/government bodies can also play a role here. The EU and the Korean government have in the past come down heavily on Microsoft on issues). There are enough reasons to believe that the software companies are sucking customer’s resources. The discretionary spending of CIO’s are less than 25% on an average and several arbitrarily forced expense items like maintenance tie the hands of the CIO and in turn limit the ability of business to spend more on technology and go after innovation centered on technologies abilities. This does not see any chances of reversal. I have never been able to get a convincing reply from product vendors on why the maintenance cost structure never changes much. With product maturity, increasing community of users and with options like offshoring, the net effect should reach the consumer. Its time to question the logic behind the maintenance revenue stream of product vendors – in every other industry with scale, the maintenance charges or for that matter the service charges shall come down-benefits of scale would reach the customer. Strangely, software industry has no such compulsions. Customers need to have credible alternatives for maintenance and the time to create such options are now – particularly when the enterprise software industry is undergoing massive changes.
Labels: Emerging Trends, Enterprise Software, Maintenance Pricing|
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