Avoiding "Empty Calories" in Software Spend

Vinnie Mirchandani does not have many friends -- except his blogging brethren -- at Oracle and SAP (or Infor, JDE, Ariba, or any other vendor who has come up against him on the other side of the negotiating table). As a hired gun for the CIO, Vinnie's job is not only to help companies think about how best to select the right software and outsourcing solutions, but to get the costs associated with said code and services down as well. In a recent post, Vinnie describes why "software maintenance reflects the most empty calories in IT spend from a buyer's perspective."

Here are some of his more salient thoughts on the matter: "Paying for bug fixes smacks of 'double jeopardy'. The software industry delivers shoddy code and charges a license fee for it (with minimal warranty), then expects buyers to pay maintenance to get bug fixes ... During implementation before they go live on software, few customers tax support lines. Indeed they are under another 'double jeopardy' -- paying the systems integrator (often Oracle or SAP Consulting) in addition to paying maintenance ... [and] most software vendors have moved maintenance of older releases offshore to India, E. Europe etc, but have kept the savings without passing any of that along."

Vinnie suggests that "fair maintenance pricing would be in a bell curve -- gradually ramp up years 1 and 2, gradually ramp down starting in year 5. But today the software industry expects full rates from day one through termination." So if you’re looking to reduce IT spend, definitely put software maintenance on the negotiating table. And don't be deterred about going with a third-party maintenance and support package as well (despite Oracle's recent actions against SAP).

Jason Busch

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