Tough Talk for Hard Times

19.01.2009

But there are always exceptions. For example, under most vendor-generated software contracts, customers begin paying for maintenance before the ink has dried on the contract -- even if it takes a year or more to implement the system. But some IT leaders push hard not to pay maintenance for any software until the system has gone live. Cortese says he's had mixed results in attempting to defer maintenance, but he was successful recently on a seven-figure CRM license.

YRC Worldwide's Schleiden tries to get the first year of maintenance free of charge. Though he, too, is not always successful, he says that "lately, the percentage [of vendors that concede] is higher than it's been in the past."

Schleiden's IT procurement group also tracks the number of software maintenance calls it puts out to each of its suppliers annually to make sure YRC is getting its money's worth. Last year, Schleiden renegotiated maintenance fees with some vendors and shifted to use-based maintenance agreements with others. With one ERP vendor, he recently negotiated a three-year maintenance agreement at a 2% annual increase cap per year.

Schleiden says it's easier to renegotiate maintenance agreements for middleware software than it is for mainframe systems because there's more competition in the middleware market.

Other users take a hard line across the board on any maintenance fee increases. "We make it clear to all of our suppliers that while software [is] important to our company, the focus of our company is selling things like helicopters and golf carts," says Sherri Zapinski, director of Textron Inc.'s indirect strategic sourcing center of excellence. "So if an engine supplier doesn't get to raise its prices, it's not fair if someone like a software supplier that's used for overhead gets to raise its prices."