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The pros and cons of third-party software support

Oracle-SAP suit sparks discussion of going with a third party

By , Network World
April 17, 2007 03:47 PM ET

Network World - The Virginia Farm Bureau has been using PeopleSoft Financials since 1993, and for most of that time the organization paid hefty support costs for what Farm Bureau officials considered to be limited service.

PeopleSoft, now owned by Oracle, didn’t support customized versions of its software, and support engineers were often hard to reach, says Tony Spears, the Farm Bureau’s financial systems administrator.

So like many organizations, the Farm Bureau decided late last year to switch to third-party support offered by Rimini Street, and its support costs were slashed in half.

“We just couldn’t really justify the cost associated with [support from PeopleSoft],” Spears says.

Third-party support was put under the spotlight last month when Oracle accused rival SAP and its TomorrowNow subsidiary of stealing proprietary information in the process of providing third-party maintenance and support to customers of Oracle applications.

Some analysts have seen the lawsuit as a defense against SAP undercutting a major revenue stream by offering cheap support. But Oracle has done the same by offering low-cost maintenance and support to customers of Red Hat Linux.

Forrester Research analyst Ray Wang says he hopes third-party maintenance remains a viable option for customers, because many simply don’t need the expensive service offered by software vendors. The cost of maintenance from a software vendor is usually about 20% of the cost of software licenses, while third-party vendors offer support for half that price, Wang says.

Not everyone should use third-party support, despite the cost savings, he notes. Going with third-party vendors prevents you from getting the latest releases, security updates or patches, he says. But if your business needs only minimal changes or updates, if you have a subsidiary planning to reduce software use, or if you’ve decided not to get the latest upgraded version of an application, third-party is often a good choice.

“It goes back to what kind of business are you, what kind of stage are you in,” Wang says.

Software vendors often don’t provide indefinite support, either. You might be limited to eight years of support, and have to pay extra money in the final years, he says. “In some cases, the product is so old the company [that made it] has gone bankrupt,” he says.


Third parties can't do it all

Not every product can be supported effectively by a third party, says Steve Striebel, co-owner and vice president of sales for third-party vendor Versytec, which supports only one line of products: Oracle's JD Edwards World.

“From a support standpoint, if you don’t have access to the source code … it’s really hard to fix bugs and fix specific problems,” Striebel says. “JDE World is written in such a way that first of all we have access to all the critical source code we need. Second of all, you can make line-item changes in the code to fix a bug, to make regulatory updates and things like that.”

Striebel says he thinks TomorrowNow overextended itself by providing support for Oracle products that could not be maintained effectively by a third party, leading to the company apparently accessing proprietary information it didn’t have a right to see.

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