Benioff’s latest anti-maintenance fee rant apparently was triggered by a Oracle Siebel customer who told him that the company paid $15 million for its Siebel maintenance. Salesforce.com Economics, a software-as-a-service (SaaS) vendor, directly competes with Siebel. Not surprising that Benioff would want to use that juicy tidbit against a competitor.
Marc Benioff, CEO, Salesforce.com, is one of the few true iconoclasts in the IT industry. So, when he called for the end of software maintenance fees a few months back, it got noticed — cheered by many, reviled by others.
Software maintenance isn’t about this kind of technical support. It’s about getting routine updates and patches, something many feel they should get automatically with the license. In fact, organizations often get the updates and never install them. For the maintenance fee, you only get the update; you still have to install it, which may entail considerable work.
This is different from technical support for which you pay extra depending on the level of service you want. Technical support buys you problem resolution. If you have a technical problem and you want one-hour response directly from a support engineer, you will pay more than if you can accept a 24-hour email response.
With SaaS, the maintenance fee is inherent. Whenever the product is updated, enhanced, fixed, patched, whatever Economics, you get it automatically the next time you log on. Often you don’t even realize the software has been changed. It is part of what you buy when you pay your subscription fee. You might pay a SaaS vendor extra for additional professional services, but routine software maintenance is part of the deal.
Software maintenance fees, paid annually, amount to a percentage of the price of the license, typically 15 percent. If the cost of a license is $100,000, then the annual license fee is $15,000. Each licensed software product you use probably comes with a maintenance fee. You don’t need many products before it adds up to real money.
Maintenance fees pose an interesting problem. Supposedly they are optional, but you usually have to go to great lengths and withstand intense pressure to get it stripped out of the contract. If you don’t pay it, you won’t get software upgrades and patches or fixes. And since software always has problems, vendors sow a lot of fear, uncertainty, and doubt (FUD) to drive maintenance fees.
1. Negotiate — maintenance is negotiable. If the vendor won’t negotiate maintenance, look for another product.
2. Do without maintenance — based on your cost-risk analysis.
3. Opt for SaaS — with an SaaS product, maintenance is included.
Here are three things you can do to avoid software maintenance fees:
SaaS usually results in lower software costs because SaaS vendors have certain cost advantages, such as not having to support all the different platforms customers run. They only need to support browser access. By adding SaaS products where appropriate, you can reduce overall software costs. ###
Benioff’s comments have been reproduced all over the Internet, here and here for example. Sure they’re self-serving, but that doesn’t mean he isn’t onto something.
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