July 19, 2008 at 7:52 pm
Comments posted to this topic are about the item Going Naked
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July 19, 2008 at 9:23 pm
Agreed, most often the support agreements are rarely used to the extent that the expense is covered. I too really appreciate the price per call structure that MS offers, especially that you can purchase 10 packs, etc. I think too often the vendors really don't allow for the consideration of a per call support agreement and with that the company purchasing the software is afraid to venture too far without it.
So, I would recommend buying the support agreement for the first year to see what the support needs are like and then planning to negotiate the appropriate agreement for the next year and subsequent. I have even seen using the standard agreement for the first year after every major upgrade and then scaling back once the support requirements are understood. Not quite "naked" but a bit more managed than in most cases.
Thanks for the article. Looking forward to hearing others thoughts as well.
David
@SQLTentmaker“He is no fool who gives what he cannot keep to gain that which he cannot lose” - Jim Elliot
July 21, 2008 at 4:36 am
And they have this information or they wouldn't know how to price the agreements.
Hmmm... I'd take issue with that, I think certainly the smaller vendors don't have the first clue, they just charge what they think the market will bear, which is 15-20% of the purchase price. In fact I read a study once stating that most software pricing is plucked out of thin air, I can believe it...
Personally I only take agreements out on business critical, specialist apps, and then religiously. I have tried buying a ten pack of support calls for Microsoft stuff but in my experience (not being on the cutting edge, admittedly) there's very little Google can't fix these days (only your internet connection ;))
July 21, 2008 at 5:48 am
I'm not a fan of maintenance either, and skipped it on a regular basis as a manager. Maintenance comes in two flavors, minor upgrades/bug fixes (which I'm not inclined to pay for!) and upgrade protection (more interesting, if you understand their upgrade cycle).
I suspect the pricing is based on a combination of doing what everyone else does and also on understanding corporate budgets. CFO's expect to pay maintenance and seldom argue about that part (and will actively question you if you don't purchase it!), its getting the initial approval that is hard. Off topic slightly, you'll find products fall into two buckets; those that require a VP level decision and those that don't (typically under $500/copy) and most SQL tools fall into the latter.
July 21, 2008 at 6:49 am
For some reason, I've tended to serve on teams where the opposite issue comes up.
Maintenance agreements are always considered to be an illigitimate expense in some organizations. Hence they get declined. When a problem pops up, several developers and/or technicians are assigned to figure out the problem. Although it's certainly appropriate to work under the assumption that well trained staff should be able to work through most problems, I've seen some very able people labor for weeks trying to solve a problem that might have been solved with one service call. The cost of having highly trained tech staff working for weeks, much less the ripple effects to the rest of the project in terms of bottlenecks is rarely considered by management in these scenarios.
Yes, it does take money to staff a tech support team so the $250 per call expense from Microsoft is appreciated by me. On the other hand, many of the support contracts offered by software suppliers do give the appearance of randomness. If those suppliers thought through this more, maybe more companies would purchase support contracts, and it would be a good business for everyone.
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July 21, 2008 at 9:37 am
I stand firmly in the 'IT DEPENDS" camp on this one. In some cases we have purchased the entire package and have had no regrets. And in some cases it has been way over what we needed.
Steve, thanks for bringing this issue to the group for there is one other side of it that should get a little air time. Support is great if you use it when it should be used. Some will buy the entire support package and then abuse the privilege, calling everytime anything odd happens, without thought, or any analysis. Others buy the package and do not call until they have expended days or weeks trying to solve the problem themselves.
Maintenance should be contacted after some of the known basics have been explored, and before the issue requires building internal expertise that will take too long to deliver the solution. Problem is this this is that we are either too quick or too slow to make the call.
If called when appropriate it works and will save you hours, days, and or dollars.:)
Miles...
Not all gray hairs are Dinosaurs!
July 21, 2008 at 9:39 am
I know that with smaller companies selling maintenance is critical to helping fund their bug fixes and new feature additions.
We resell ERP (accounting) software and I am sure that without maintenance the software would stagnate and probably die. Many companies only replace their software in 7 year cycles so once the majority of businesses have the software there isn't much movement (yes there are new companies and growing companies but it's not that much). Just upgrading your software to work with Vista or the latest copy of SQL or whatever takes time and effort. You might be surprised how often Microsoft introduces bugs which have a cascading effect on software, especially when it has millions of lines of code which exercise most features.
So in our case it's pretty important that customers get the maintenance. Additionally like another poster said it's mission criticial. Without your accounting software you're pretty much in deep trouble.
I think it depends on the type of application it is.
July 21, 2008 at 9:45 am
I worked for 10 years at GM's insurance company that administered their extended service contracts as well as handled many warranty issues. I can say that most larger companies who are selling a service agreement are doing it to make money. They price the service agreement to be more than their average cost of repairs/labor for the insured product.
They have to price it at more than their cost, or they will loose money by selling the service contracts. I saw several underpriced competitors go out of business by trying to undercut the big guys.
Also remember that often service agreements are marked up beyond their cost from the manufacturer. Such as when a vendor is reselling the software and agreement. they can often make more profit off of the service contract than the product itself. It is not uncommon for a reseller to price the service contract at double or triple their cost! Talk about a rip off...
In my opinion service contracts are not worth purchasing unless you expect the product to be problematic or is known to have issues where you know you will use it.
July 21, 2008 at 12:17 pm
I am a technical support analyst for a budgeting application. I think support and maintenance is valuable for most customers. Besides assisting customers with setting up the application, we provide free upgrades and product fixes. Without the maintenance fees we would not be able to staff the agents required to answer the questions, nor would continued improvements in the software exists. There are two sides to the coin. In our setup, customers pay a fee based on the number of licenses purchased and they receive unlimited calls. If customers don't wish to take time to troubleshoot the issues themselves, then this is probably a good way to go. We will eventually be going to a model of pay per incident or buying bundles. In this situation, customers who don't like to research before calling will find that their maintenance costs will escalate.
I have had customers call quickly and while waiting for support resolved their own issues. I have also had customers that did all the research they could and would have saved themselves hours/days of frustation if they had simply called or at least used the knowledgebase to see if the issue was known.
I definitely think that organizations need to think about the business relevance of their software. If they have problems, how long can they wait to receive support. If it is a critical system, then support is probably worthwile. For those that buy support as needed, some companies have priority systems. If you are an occassional customer, you may have a longer wait time than another customer who has a contract in place.
I have also found that customers who did not purchase support ultimately will find a situation where they need it; only to be denied because the question isn't something that can be answered in two minutes. If you like to rely on the internet to resolve issues, a pay as you go plan may be worthwhile.
I know in our organization we do not currently offer it. We do provide the updates for free for those who access the knowledgebase, but they ultimately will have to pay to have help implementing it.
July 21, 2008 at 6:16 pm
Produce a product riddled with problems and then force people to buy your heavily marked-up and monopolized insurance to cover the faulty product. What a concept.
James Stover, McDBA
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