3PM 3rd Parties Software Maintenance Support Alternative technical support

Economic feasibility

The idea of alternative technical support of software grew from the concept of Software Asset Management (SAM) which appeared in the late nineties and was issued in international standard ISO/IEC 19770 Software Asset Management (SAM) in 2006. There is no need to prove that complete management of the acquired rights to software (licenses) is of great value for large and medium-sized companies, otherwise this segment of the corporate software and services in its setup did not develop so considerable rates both in Russia and in the world. Fight against so-called shelfware gains ground (purchased, but not used software for which it is necessary to pay technical support, literally "shelf to software").

Interestingly following: within measures for optimization of a portfolio of software, financial payments and vendor relations of software questions of justice of the amount of payments which are demanded by software suppliers for annual technical support and the right to software updatings very often began to arise. Very often the case consisting that the customer was not going to develop, upgrade and update the version of the used software had cases and to it there was quite enough that the version at which it already worked and from which he would like to receive a maximum to justify already made investments.

It is clear, that nobody argues on advantage and expediency of upgrade and software updating taking into account new functionality and other features which are offered within new versions. Nevertheless there is a question of justice and need to pay annual payment to software supplier (in the western terminology to vendor) which in certain cases can reach 25% of cost of all earlier purchased software. Especially in cases when it is not going to update a system and only support of the current version of software is necessary.

As a rule, support of the current version of software, for example ERP systems, comes down to the following main items:

• elimination of errors in the current version of a system (bug fixing),
• release of the patches connected with an exit of new IT solutions in the market which can be used within a supported platform (a release of new versions of OS, DBMS, the server hardware and tp)
• release of the patches connected with change of the local legislation, for example in the field of the tax or labor law
• support service,
• access to knowledge bases, description of problem solvings and tp.

By 2017 in the West there passed several high-profile cases when antimonopoly services within or separately from claims of customers initiated investigations about legitimacy of software suppliers to require complete payment for technical maintenance of the purchased software for cases when the customer needs only service of support of the current version. So in fact, it was talked of a possibility of acquisition of a technical support service and the right to updates of the version separately, namely separately technical support of the existing version and separately the right to updates of the version. At the same time many interesting questions emerged, for example: whether to consider the opened vulnerability of software and a patch on its elimination updating or elimination of the hidden defect of a product which it is obliged to eliminate producer not very well what free of charge. The matter was resolved for benefit of customers of software and obliged software suppliers to eliminate the hidden defects, i.e. to provide customers who are not on technical support, access to the patches necessary for security of a system. Also in some cases software suppliers obliged to provide sales opportunity of technical support services and rights to updating of the version separately. The most interesting to many users of software, including in Russia, the question is:
A) not all about it know,
B) not all this is used in practice when it would make sense to use it,
C) end users of software agree within signing of standard contracts of acquisition of the rights to software to the conditions which are directly contradicting the specified provisions.

All this story will be complicated by distinction of regulations of the antitrust law in the local markets, templates of the standard contract on delivery of software which uses this or that vendor in this or that local market and from which it departs only in exceptional cases.

Often developers/software suppliers enter in delivery contracts softwares with final customers a condition that the final customer has no right to refuse technical support on a part of the purchased software but only on all packet that forces the customer to continue to pay for all packet of the purchased software. What is not absolutely fair and recognized as illegal in a number of the countries. As a result the customer who was not going to develop and update the used version of software often faces before the choice: or completely to pay the annual payment demanded by software supplier or to refuse completely technical support and upon to have risk of a stop or incorrect work of the specific application. Either to pay in an alternative of this story with need complete payment or to refuse official technical support of vendor primitive theft is. It can be illegal downloading or acquisition of necessary patches and updates by the specific staff of services of operation/maintenance of software that in many cases takes place and in our country, but especially is advertized by nobody: the customer clear for what reason, and specific software supplier – for the image reasons. It is not obligatory for market to know that someone from customers of specific vendor refused official technical support.

Result of these processes was emergence of a niche of services of alternative technical support which would be acceptable level at the price and quality for the client and allowed to replace official technical support of vendor. This niche, namely the market 3rd parties software maintenance support (or 3PM) is one of several most fast-growing segments of the market of IT services and applications for business. According to Gartner "By 2020 up to 10% of the Enterprises Having the Strategy of Digital Transformation Will Use Specialized Providers of Technical Support of the 3rd Line of ERP Systems and Reducing Costs Not Less than by 50% Annually" (data for 2017).

The service essence for the final customer consists that he receives an analog of technical support of vendor at more reasonable price and in a number of the moments of the best quality. The most important and necessary condition of transition to 3PM is understanding by the final customer that it is not going to upgrade platforms to the next version and remains on the current version during some period (normally no more than 5-7 years). If this condition is complied and the customer does not need new versions of software to it economically to consider the possibility of transition to alternative technical support of software to specialized provider 3PM of services. This statement especially is effective that often software suppliers demand from the final customer the mezzanine board, over standard when the customer uses the old version of software which is already removed from standard technical support.

Basic reason of transition to alternative technical support of software – economic. The service CFO is not ready to pay annually on average 20%-25% of software cost which is not going to be developed. It is just common sense. What in this case to do to service IT to guarantee correct work of software displaid from support? Or to resolve an issue unofficial with all risks and the following effects, or to look for alternative service provider of 3PM.

The list of the platforms supported by suppliers of alternative technical support is rather extensive: Microsoft SQL SAP Business Suite SAP HANA DB Oracle DB Oracle Hyperion Oracle Siebel Oracle JDEdwards PeopleSoft Oracle Fusion Middleware. In general the list supported, including in the markets out of USA platforms is partially crossed with the business applications and databases used by customers in Russia and the CIS countries.

Stages of transition to 3PM

Of course a question of failure (if the company did not refuse yet) from official technical support of software from vendor - very serious question which requires accurate approval at all levels: from financial service which generally is also her initiator, to service of operation of software. According to Gartner, for 2017 the number of the companies which refused prolongation of a technical support service is from 5 to 10% of cumulative base of installations. There are many questions:

• what opportunities at 3PM of provider to provide timely closing of tickets on problems of compliance to the changing local legislation,
• as development of patches is performed,
• what opportunities remain with the customer after failure from official technical support from software supplier from what access will be cut off.

Activity on testing of service quality of the supplier of 3PM and failure from official technical support rather long process which can be broken into several large stages:

Determination of expediency of transition to alternative technical support to independent provider. Here the main trigger is understanding of strategy of use of the existing software. It is obvious what for the companies which declare import substitution policy or import platforms domestic to solutions are going to substitute it makes sense to work the strategy of transition and to optimize costs for maintenance of software taken out of service. Including using 3PM of provider, planned replacement or migration on alternative software or lack of expediency is other reason to develop and update software.

Signing of NDA between the customer and 3PM provider, information transfer about specifics of the used applications, the strategy of their operation for the medium-term period, determination of requirements and the mode of rendering services. Receiving TKP on service within the approved SLA. Comparison of cost and service quality with the current service which is rendered by specific vendor of software;

The solution of test tickets or agreement signature for the trial period (as a rule, quarter) during which the service is tested;

Acceptance the decision on failure from official technical support of vendor and transition to services of alternative technical support of 3PM-provider

Downloading of all necessary patches, notes, versions to which the customer has access now and which can be useful in the future. This activity is absolutely legal while the customer is on official technical support at vendor and is performed, as a rule, before the failure notice from technical support.

Embedding of the third line of technical support of 3PM-provider or in the existing system of acceptance of requests/registration of incidents or in the contract with the current technical support provider of the second line (if the external supplier / the system integrator is used that allows to receive service from some hands on one SLA).

One of practical business of cases where this service – a story with SAP HANA can be demanded. After a release of this solution, the software developer, announced that all new functionality will be added generally to versions of S4Hana, and existing solutions (SAP ERP) will only be supported therefore customers are recommended to migrate on S4HANA. However, many customers using SAP applications of ERP both in Russia and in the world are not going to refuse the existing system and to migrate on SAP HANA. For various reasons. Someone has no budget, someone has other important projects tied on the current functionality, someone is simply not ready to develop a product. Upgrade to the new version platforms simply because so recommended vendor or therefore in a new product there was a new improved possibility of processing of reports (to use which, it is necessary to enclose still almost as much investments how many it is already spent). It is elementary common sense. According to the report of 2016 from Nucleus Research company, "9 of 10 customers of SAP are not going to pass to S4HANA". It turns out if the customer is not going to update the version, to him rather current version and then there is a question: for what to pay the amount required annually, only for patches and updates of the current version? It is expensive and unfair. It is more optimal to consider the available alternatives: or in general to refuse technical support or to pass to support to specialized 3PM-provider. ^[1]

Not all from the methods of budget optimization recommended on the scheme are universal as not all software suppliers have the program of decrease in level of support or are ready to sell a technical support service a packet for several years. In Russia for 2017 the possibility of resale of the purchased software is not absolutely clear to the third-party companies which are not connected with the company which purchased software. Thus, acquisition of technical support services of software at 3PM of provider – rather universal recommendation for our Russian reality.

In general service of alternative technical support of software - a big call for large software developers as takes away easy bread to which they got used for decades of lack of an alternative. Nevertheless, for the final customer who wants to receive clear service for reasonable money, 3PM - the best alternative, than illegal theft of official patches which are released by software developer or uncomplaining annual payments in his address. What more competition will be in the market, especially it will be effective, especially large software suppliers who pretend so far that there are no problems with technical support will be flexible or these are not their problems, but the customer's problem.

Notes