Some organizations spend 90% of their IT budget on operating and expanding enterprise software.
Organizations are becoming more dependent on technology, regardless of size, type, private sector or public sector. This dependency has accelerated recently, and the ongoing economic and business challenges leading up to 2021 have pushed digital transformation and the adoption of new technologies to the top of many corporate agendas.
As a result, the organization is at a crossroads. Companies must plan their investment in digital technology and embrace new business models and ways of working and thinking. We are also under pressure to reduce costs and improve business processes. This means you can do more effectively at less cost. On the other hand, they mistakenly believe that they need to hold costly and costly support contracts with ERP vendors. Replacing existing ERP systems is a very costly option, as these customized platforms are mature, function efficiently, and are built into the corporate fabric. Today’s ERP systems usually well meet the business needs of today’s enterprises.
Therefore, many companies are plagued by high maintenance fees and various additional costs, and can spend 90% of their IT budget on ongoing operations and expansion costs. However, when it comes to preserving existing enterprise platforms, enterprises now have a real choice. This is an option to save money and improve service delivery. Organizations are looking to independent third-party software support companies to reduce this huge overhead.
According to a recent Gartner report, the third-party enterprise support market is projected to grow from $ 351 million in 2019 to $ 1.05 billion by 2023, up 200%. The report points out that “the demand from organizations that need low-cost alternatives to escalating technical maintenance, support, and consulting services provided by vendors” is increasing.
Here are three tips to help you continue to support your essential systems while saving the budget you can spend on new technology initiatives for this impoverished organization.
1. Do math!Find out the actual cost of leaving the lights on
Most IT and finance teams know that they spend most of their IT budget on annual software maintenance. However, many are unaware of the total cost of ownership (TCO) of an ERP system.
In 2020, IDG conducted a global survey of Oracle E-Business Suite licensees to collect data and insights on the challenges and strategies faced in adapting to the current Oracle ERP support model.
According to the survey ‘Fifty-eight percent of survey respondents are dissatisfied with high annual maintenance and support fees, coupled with poor quality of support services (18%). According to the report, cost is the biggest challenge for an organization. Nearly 83% feel that the cost of supporting and maintaining an Oracle database is too high.
Interestingly, Gartner finds that when comparing third-party service costs to vendors’ annual maintenance pricing models and policies, the annual savings in third-party support fees are at least 50%. As Gartner reports, “[A] The main benefit of third-party support is that customers can take advantage of savings (at least 50% at cost) to fund digital transformation projects that they couldn’t achieve while stuck in an ever-growing support cycle. is. “
Organizations should investigate the annual maintenance fee for enterprise applications. For example, Rimini Street, where I work, offers a third-party support TCO savings calculation tool.
2. Regain control of the roadmap
Many organizations have evolving business strategies that incorporate digital transformation. Therefore, your IT strategy must be consistent with your business strategy. However, some vendor support policies require customers to follow the vendor’s technology roadmap in order to maintain full support for their enterprise systems. This means upgrading or migrating to a new platform when the vendor requests it, not when it benefits your business. Organizations are increasingly considering whether to continue with the vendor-directed roadmap or consider better arrangements to replace current support and service models.
In a recent EBS and PeopleSoft survey conducted by IDG, the majority of respondents running the latest major releases keep their updates up-to-date, primarily for maintenance and security reasons. I will., On the other hand, less than half (47%) consistently offer strong new innovations. For Oracle Database, 73% of survey respondents do not feel that they have a database extension that is well worth it. More than a quarter (26.3 percent) report not receiving valuable Oracle database extensions.
Many Oracle licensees are rerouting their IT roadmap by opting out of vendor support contracts and allowing funds to be diverted to transformational initiatives. They regain strategic control and set courses based on business needs rather than vendor timelines.
Therefore, organizations should perform a comparative analysis of the roadmap with the vendor’s roadmap, identify gaps in the required components from the vendor’s roadmap, and assess the importance and cost of the missing components.
3. Stay on top of the pulsations of technology change
Many other for-profit companies, such as consulting firms, system integrators, and other technology providers, are developing support services in a timely manner. More importantly, thousands of companies around the world employ third-party support. This reduces unconventional movements.
We are also in the midst of the 4th industrial era. Technology is evolving rapidly, with new open source software and the best cloud solutions on the market on a regular basis. Most enterprise customers are expected to soon have access to more viable and cost-effective alternative solutions that are completely different from the traditional products used today.
According to the IDG report, the most important Oracle Database strategy among the respondents was to reduce the Oracle Database footprint. Forty-one percent of respondents are actively doing this, five times more than in the previous 2017 global survey. 69% of respondents were considering migrating or migrating to open source or other non-Oracle Cloud databases. The main reason was to reduce costs and avoid license compliance issues. This may be helpful with third party support. For example, many mission-critical applications like ERP cannot run on open source databases, so many are investigating third-party support to reduce costs.
Emma Hose is EMEA, Group Vice President and General Manager of Rimini Street.
Should you consider third-party enterprise software support?
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