Friday, March 11, 2005
Big Software's Blood Sport:
"...The dirty little secret about enterprise applications is that once businesses have spent the large sums necessary to get them up and running, they have little incentive to continue making investments. The big gains in process automation come fairly early, and then the returns diminish steadily. Why go through the pain of buying and installing a new package if the old one works?
As their traditional markets have tapped out, enterprise-software makers have had to seek new avenues for growth. One way that has worked in the past involves simply jacking up the maintenance fees charged to existing customers. Over recent years, according to Computerworld, maintenance charges for enterprise systems have jumped from about 10% of licensing fees to as much as 25%. But customers are beginning to rebel against such tactics. A 2004 study by AMR Research revealed that corporate software buyers are 'furious' about escalating maintenance costs, and at least a third of them are planning to demand changes in their software contracts..."
"...The dirty little secret about enterprise applications is that once businesses have spent the large sums necessary to get them up and running, they have little incentive to continue making investments. The big gains in process automation come fairly early, and then the returns diminish steadily. Why go through the pain of buying and installing a new package if the old one works?
As their traditional markets have tapped out, enterprise-software makers have had to seek new avenues for growth. One way that has worked in the past involves simply jacking up the maintenance fees charged to existing customers. Over recent years, according to Computerworld, maintenance charges for enterprise systems have jumped from about 10% of licensing fees to as much as 25%. But customers are beginning to rebel against such tactics. A 2004 study by AMR Research revealed that corporate software buyers are 'furious' about escalating maintenance costs, and at least a third of them are planning to demand changes in their software contracts..."
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