May 17, 2009 at 9:54 pm
Comments posted to this topic are about the item Vendor Value
May 17, 2009 at 9:59 pm
I have no qualms about falling on the side of the argument that maintenance shouldn't be a fee-based element of the business process, but I do think the idea only bad software requires maintenance is faulty. Many systems can be improved by incremental value-adds if well-designed, and a subscription fee model makes sense for that (which is fundamentally different from charging maintenance fees).
My basic point though isn't about fee structures, but that I have to take exception with the notion only bad products require maintenance. The best products deserve cyclic improvement, and maintenance is part of that, of course.
May 18, 2009 at 12:11 am
I think maintenance is something that is very dependent on the purpose of the application. I wouldn't pay maintenance on basic office software, but am perfectly willing to pay it on the accounting systems I support. The maintenance fees on those systems endure I get swift updates when regulatory changes requrie modifications (the SOX updates were included in maintenance), and we get a new release every three years or so that makes sure we don't get behind the technology curve.
May 18, 2009 at 1:29 am
My software company rents/leases my software to our clients.
They pay per user per month, indefinitely.
For that they get: all upgrades, and support
It works very well because there is not a huge capital outlay in the beginning,
and they don't end up with licenses that they bought but are not using because of downsizing etc.
Every month we get the latest count of licenses, and that's what we bill.
For us it brings in consistent, regular income, which is great for budgeting.
We certainly feel justified in doing this as the client has more manageable payments,
and all new features we build in (currently every month) they get, so they never feel like they're on the old version.
Plus it means we don't need to support more than, at most, 2 versions at a time 🙂
if you don't have the time to do it right, when will you have the time to do it over ?
May 18, 2009 at 1:57 am
If I'm honest, it seems to me to all be semantics. Why should I care whether what I pay for software is called "maintenance" or "rental charge"? Why should I care whether I install updates received in exchange for my "maintenance charge" as opposed to new full versions each bought separately?
In short, I don't care. What a software company chooses to call its charges is irrelevant to me. All it boils down to is that I have to shell out £x as an initial one-off cost plus £y as an ongoing periodic outlay to keep the thing running. If the two costs over the expected lifetime of the system work out to an acceptable price, the vendor gets our business. If not, they get nothing.
What does make me see red, though, is any attempt by the software manufacturer to make their licencing structure deliberately difficult to understand, and here is where I think pressure ought to be applied to vendors. If a software audit takes person-days (or even weeks) to collate, and still needs to be "interpreted", the licencing structure is obstructive and too confusing.
Courts in the UK, when hearing law suits, apply a tests of reasonableness based the opinion of the "man in the street" (personified by the judge). I fail to see why reasonable (tested by similar criteria) clarity could not be required of software vendors in their licencing.
Semper in excretia, suus solum profundum variat
May 18, 2009 at 5:25 am
Price leadership from Oracle? I nearly fell off my chair in hysteria. I mean seriously?
"...and I wish for world peace. and enough food for all the kids. and my two front teeth."
James Stover, McDBA
May 18, 2009 at 8:22 am
Recently I made a large 'final' payment to the last credit card I own. The following month my bill came in and I expected to see a zero balance. Instead there was a small balance, around $50. I called the company and was told; "Sir, that is a payment maintenance fee"... WHAT??? After a few days of hassling with the credit card company I got that "maintenance fee" waived and the card was finally paid off.
Maintenance fees in software, like credit cards, is simply a form of robbery with a nice name. Either the whole concept should just be illegal, or we should pass laws and force vendors to provide honest descriptions in naming such as...
"Larry Ellison needs a few new yacht gizmos for his Americas Cup sail fee"
May 18, 2009 at 8:28 am
Interesting discussion, though I think the terminology is really in the way. What most agreements resemble most is a car lease, where you make a down payment and pay a regular fee (whether monthly or annually). The problem when applying this model to the software industry, is that you cannot just go to a different leasing company and get the same product.
Regarding Microsoft not following this model, I beg to differ. Enterprise software from Microsoft enatils a maintenance agreement, whether you pay for it separately of include it in the up-front licensing fee. I hate to think what a mess we would all be in if we did not get any maintenance support from Microsoft, whose code seems holier than the Pope. Unfortunately we seem stuck with it forever.
Perhaps there should be a new paradigm, but what it should look like is a very thorny issue, since whole corporate financial models are based on the status quo.
May 18, 2009 at 8:34 am
blandry (5/18/2009)
Maintenance fees in software, like credit cards, is simply a form of robbery with a nice name. Either the whole concept should just be illegal, or we should pass laws and force vendors to provide honest descriptions in naming such as...
Why should maintenance fees be illegal for software? As a user, you enter into a contract with a vendor with your eyes open. If you don't like the terms, don't buy the software. Or, negotiate different terms. I prefer to pay maintenance every year rather than paying full price for an upgrade when they come out.
May 18, 2009 at 8:47 am
Just to clarify: we don't charge any upfront software fee (only nominal installation fee)
They pay per user, per month, and that's the only fees that they pay for the software.
Our clients like it because:
1.They are not locked by having spent millions on the software upfront.
2.It is much better for their budgeting, and makes it affordable. It means that everyone from 1 man businesses, to big corporates can afford to use the software. This is a HUGE benefit in a developing economy like South Africa.
3.It is not an exorbitant amount per user per month. if it was, our clients wouldn't use us.
4.They can leave at any point, only having to give us 1 month's notice. This is more fair than them paying a huge amount upfront, and then when they find out the system is not for them, they don't get anything back.
if you don't have the time to do it right, when will you have the time to do it over ?
May 18, 2009 at 8:55 am
Irish Flyer (5/18/2009)
....What most agreements resemble most is a car lease....
In some ways, yes. In others, no. I can see plenty of parallels with buying a take-away pizza - I'm sure you'll recognise the scenario.
You go into the pizza restaurant, and look at the menu. You find the "all the trimmings" pizza has a name that has no bearing on reality (super supreme mega big daddy perfection), and has a graded pricing structure based on size. You can, of course, add extras to it, at a nominal extra charge. However, there are also several so called deals available based sometimes on bulk purchase (buy a 12" pizza and get a drink free), sometimes on loyalty (20% off coupon) and sometimes on timing (buy one, get one free - Thursday lunchtimes only). Moreover, there's often overlap between the offers. In the end (it being a Thursday lunchtime, and with you waving your money off coupon), you've no idea which combination of offers is most cost effective, so you simply go with what your sales yoof tells you.
All very confusing, but at least you get your meal (even if you find, like software, that the reality never quite lives up to the expectation). You're not, however, expected years later to recall that confusing decision process to prove that you really were entitled to both pizzas even when the invoice showed you only paid the price of one. Or even, God forbid, expected to pay the full cost of the meal again, just because you lost the receipt 6 months ago.
Grrr.
[/dismount hobby horse]
Semper in excretia, suus solum profundum variat
May 18, 2009 at 9:14 am
Mathew,
Thanks for the note, and I think you have a good business. 37 Signals does business like this, and I think there is some good value for many companies to lease software monthly. The downside comes in if you want to change. Can you get your data? Can it easily be loaded somewhere else?
I think for this to work well, and for many companies to be comfortable with it, we have to have standard exchange capabilities with other services.
I think the idea of the Zune Pass is great, but I don't want to use a Zune. I find their software less intuitive than the iTunes/iPod software. however I can't easily separate my device, which I own and have paid for, from the service. That's a problem for me.
I think the same thing happens with business software. If it were easy to move from Salesforce.com to Goldmine to something else, I think renting might be more attractive.
We can do this in many other places. I can take a cell phone (now) from one carrier, and often bring it to another if it's the same format (GSM). I can take my car to different places for service. I can move music from my iPod to my Zune, but I have to do it. When services can do this, it will really change software.
May 18, 2009 at 9:15 am
What does make me see red, though, is any attempt by the software manufacturer to make their licencing structure deliberately difficult to understand,
I agree. This is almost always a deliberate move.
May 18, 2009 at 9:48 am
majorbloodnock (5/18/2009)
If I'm honest, it seems to me to all be semantics. Why should I care whether what I pay for software is called "maintenance" or "rental charge"? Why should I care whether I install updates received in exchange for my "maintenance charge" as opposed to new full versions each bought separately?.
One difference is what happens at the end of the term. If you 'bought' software, you can continue to use it indefinitely even if you choose to forgo further updates and support. If you rent, you do not have that right.
...
-- FORTRAN manual for Xerox Computers --
May 18, 2009 at 9:54 am
I agree. This is almost always a deliberate move.
TV cable providers are notorious for this. They intentionally structure their offerings so that price comparisons with competitors are virtually impossible.
...
-- FORTRAN manual for Xerox Computers --
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