Re: SWMA Costs -- MIDRANGE-L

We had a customer with similar issues. They had an ERP for over 15 years. Heavily customized but they HAD paid all licensing and maintenance costs. AND they had paid the vendor for almost all of the customization. While upgrading they ERP package changed hands. The vendor said: Well we can't get you a price JUST NOW but it will be fair, so here is the key and we'll settle up after the dust clears.

Customer had actually budgeted $50,000 for this upgrade having consulted fee schedules and such. I was in the CFO's office when the call came: "$1.3 Million." The CFO said nothing and just hung up the phone, looked at me and said: "They just asked for $1.3 Million dollars!" He ran some quick queries and said: "That's more than we've paid them life to date for the software, install and training, customization, and support."

The vendor called back and again quoted the $1.3M. He was hug up on a second time.

And this is in the day when an upgrade was maybe 25% more CPW!!!

FYI They negotiated for months and ended up paying the $50K. *SIGH*

On 5/17/2023 10:56 PM, Roger Harman wrote:

In many cases, I agree with your sentiments. Sometimes, vendors are their own worst enemy.

I know of a company that, long ago, went off maintenance for a large-scale ERP system as the system had been so highly customized to the business that vendor support was really not viable. Now, they want to upgrade from V7.2 to current and need a new license key. Last I heard, the latest quote from the vendor was $1 million - just to provide a key! The vendor has provided nothing over the past few years and will provide nothing in the future. I can see a reasonable or, even unreasonable, fee but $1 million?

Roger Harman
COMMON Certified Application Developer - ILE RPG on IBM i on Power

-----Original Message-----
From: MIDRANGE-L <midrange-l-bounces@xxxxxxxxxxxxxxxxxx> On Behalf Of x y
Sent: Wednesday, May 17, 2023 2:47 PM
To: Midrange Systems Technical Discussion <midrange-l@xxxxxxxxxxxxxxxxxx>
Subject: Re: SWMA Costs

Roger, your employer wasn't completely wrong.

For a mission-critical application, you have few options. A very large
customer might be able to negotiate a deal but that doesn't address
the issue: you're going to pay big even as both line-of-business and IT
executives struggle to see the value of rapidly-increasing maintenance
rates. And COVID has nothing to do with it.

The maintenance fee I charge (20%) for an enterprise-scale quote-to-cash
application includes corrections to old code, new application
components, telephone consulting, emergency support, and source code for
new releases. My customers are in a business with paper-thin margins and
I'd rather collect 20% for the long term rather than getting cancelled
after a couple of years at 33%. Don't believe me? Get out your HP17B and
do the math on annuities (FYI, the break-even is after year 4).

When I had to pay a 32% maintenance fee on Linoma/Help Systems/Forta's RPG
Toolbox, I asked to see a list of the enhancements and corrections they'd
made that warranted the jump from 20%...and I am still waiting for that
list. The vendor failed to notify me they wouldn't allow a license
transfer to a new serial number if the software wasn't on maintenance, so
when my host put in a new box I lost the use of software I paid for and
that had been on maintenance until Help Systems jacked the maintenance in
one year by more than 50%. Not...Help-ful.

My opinion is that maintenance price-gouging contributes to the System i's
shrinking install base. Do you think ransomware is a relatively recent
phenomenon? Ha! The mainframers have been experiencing this for years.
Charging big maintenance dollars for little value--now, that's
"ransomware".

The term "maintenance fees", particularly for payroll applications, is just
wrong--it should be "insurance payments".

On Wed, May 17, 2023 at 12:24 PM Roger Harman <roger.harman@xxxxxxxxxxx>
wrote:

At an employer many years ago, they absolutely HATED software maintenance
with a passion - "It's just an annuity for vendors!".

At one point, I managed to talk them into a 3-year agreement for Infinium
payroll that gave us a really good discount. I think the original cost was
about $35k/year (this was in the mid 2000's). All was great until renewal
came up for year 4. Then, the <stuff> hit the fan as there were 3 years of
increases rolled into that new rate - on top of our pre-paid discount from
the original deal.

I had warned them of that and pointed out the original savings. Almost
didn't get it renewed until our VP of Accounting/Payroll and I pointed out
the issues of possibly not making payroll if there were an issue.

Roger Harman
COMMON Certified Application Developer - ILE RPG on IBM i on Power

-----Original Message-----
From: MIDRANGE-L <midrange-l-bounces@xxxxxxxxxxxxxxxxxx> On Behalf Of
Brad Stone
Sent: Wednesday, May 17, 2023 11:54 AM
To: Midrange Systems Technical Discussion <midrange-l@xxxxxxxxxxxxxxxxxx>
Subject: Re: SWMA Costs

On Wed, May 17, 2023 at 1:18 PM Rob Berendt <robertowenberendt@xxxxxxxxx>
wrote:

Brad is underplaying the inflation.

Sorry if I came across that way. The inflation, to be blunt, is
ridiculous. Just didn't want to get "political".

More and more people are locking into 3 year prices because of inflation.
A savings of 2% turned out to be a lot more.
If he would have locked in at the 700/year price with a 2% discount that
would have been 686/year or $2,058 for 3 years.
While (700+770+890) = $2,360. (2360 - 2058)/(2360) is a 13% discount.

And

no discussion with management every year about a budget change..
OTOH there's the whole financing of cash flow...

When did they offer this 2%? 2020? I don't remember ever being told about
it. But, I did get the letter saying that they were raising prices because
of inflation. I think I shared it with you, Rob. After reading this,
though, maybe you meant I was underplaying the 2% discount vs inflation?
Or I could see how maybe both. Then again, I have a hard enough time
getting an invoice each year from IBM for SW/HWMA.. It's like pulling
teeth.

Now, what about if you go off the platform? Refund for the years you won't
use? Probably not.

What if you swap hardware? Does it carry over? Hard to say for sure.
I'd guess some sort of extra fee if it does that kills the 2%.

What about after the 3 years is up? Will they sneak in some sort of other
fee for those that took "advantage" of the 2% for the next payments?

I was just looking at the downsides of paying ahead of time... No one has
a crystal ball, but these days I think it's easy to see where things are
going. Pay now or pay later.

Maybe we'll get a bigger discount in the future if we pay in CBDC.
(*running and hiding*).

On Wed, May 17, 2023 at 1:04 PM Buzz Fenner via MIDRANGE-L <
midrange-l@xxxxxxxxxxxxxxxxxx> wrote:

I'm looking at two proposals for hardware/SWMA support; one for one

year

and another for 3-year. The 3-year is a 2% savings which isn't quite

what

we used to save, but it would lock in the cost over 3 years.

My question is for those of you who pay annually, have you seen any
noticeable year-over-year rise in the support contract cost?

--
Buzz Fenner, Information Systems Administrator
+1 (870) 930.3374 bfenner@xxxxxxxxxxxxxxxx<mailto:

bfenner@xxxxxxxxxxxxxxxx

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