Executive Briefings

Is It Time to Scrap Your ERP Maintenance Contract?

Many ERP customers, with their installations getting long in the tooth, are considering canceling their vendor maintenance agreements, some of which can run into the millions or tens of millions of dollars.

Is It Time to Scrap Your ERP Maintenance Contract?

According to a report from Gartner, although the number of customers that have cancelled their ERP vendor's maintenance agreement is low as a proportion of the vendors' total installed base (an estimated 5 percent to 10 percent), the analyst firm is seeing a steady increase in the number of inquiries from clients who are seriously considering it.

Gartner says canceling can play an important role in "enabling an enterprise to run current mature application releases more cost-effectively, shift funds to business growth initiatives, and position itself flexibly for the best-fit future application platform." What else is driving this trend?

The ERP vendor's maintenance agreement has long been considered a mandatory line item in the IT budget. But with more of the IT budget going to growth and with little to cut elsewhere, "the ERP maintenance budget is in the spotlight for potential reduction," says Garner.

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According to a report from Gartner, although the number of customers that have cancelled their ERP vendor's maintenance agreement is low as a proportion of the vendors' total installed base (an estimated 5 percent to 10 percent), the analyst firm is seeing a steady increase in the number of inquiries from clients who are seriously considering it.

Gartner says canceling can play an important role in "enabling an enterprise to run current mature application releases more cost-effectively, shift funds to business growth initiatives, and position itself flexibly for the best-fit future application platform." What else is driving this trend?

The ERP vendor's maintenance agreement has long been considered a mandatory line item in the IT budget. But with more of the IT budget going to growth and with little to cut elsewhere, "the ERP maintenance budget is in the spotlight for potential reduction," says Garner.

Read Full Article

Is It Time to Scrap Your ERP Maintenance Contract?