Should ERP customers consider third-party support?

A recent report from Gartner give some perspective on ERP maintenance and support. The report presents the topic from different angles including justification/the business case, the associated risks and challenges, a decision tree tool, third-party support options, and even your strategy which spans after the decision vision.

The topic essentially brings up an important question: Is it time to switch to third-party software support?

Government organizations are not detached of this trend where budget cuts are enforced as well. Third-party services are a potential option to save more than 50% of annual maintenance and support fees. GFOA is one of those service providers concerned with cover government’s needs.

Third-party support options for major ERP from SAP and Oracle has grown rapidly over the past years. The market leaders in North America are: Rimini Street, Spinnaker Support and Virtual Tech. Also, Panaya offers cloud based solutions.

Customer-ERP vendor relationship model is taking a new curve as budget constraints force customers to question the feasibility of the maintenance and support fees imposed by their ERP vendors. Will ERP vendors reconsider their support and maintenance pricing models? We will be watching over for an answer to this question. Third-party support is a disruption for their revenue stream and it couldn’t be expected they will remain standstill will the pie is eaten up.

Is it worth the risk? To answer this question you need to carefully prepare the feasibility study which should provide several metrics, and on top of them is the monetary gains. Cost saving of 50% or more might be appealing but evaluating the administrative burden which includes managing contracts and SLAs should be considered as well. Actually, if cost is a major concern, you might consider other options offered over the cloud such as SaaS which might be a viable alternative as well, which might be covered in a future article.

As we have seen there is a growing interest in third party support as presented by Gartner report. The bottom line is that if you aren’t at this point yet, it is better to investigate and study the different scenarios and prepare your strategy to be ready when budget cuts hits. Being proactive might help you prepare the business case early ahead.

If you have an ERP, then Gartner report is a must read.

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Jim Love, Chief Content Officer, IT World Canada
Tamer Marzouk
Tamer Marzouk
A management consultant, with 18 years of experience in diverse capacities, Tamer Marzouk began his career as an IT professional. Marzouk is an author, speaker, and lecturer. Marzouk holds MBA and M.COMP degrees with research focused on change management and human behavior in ERP implementations.

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