Centennial Article: Software maintenance fees rise

Software maintenance fees rise

The software maintenance market is booming, as a number of vendors announce increases to already steep fees.

For example, SAP has announced that it is increasing its software maintenance fees by phasing out its Basic Support offering for new customers and, with many firms charging annual rates of between 20 and 25 per cent, any increases will hit IT budgets hard.

According to Computerworld Australia, the maintenance and support fee charged by SAP on each software licence sold will substantially increase its revenue.

Ray Wang, a principal analyst at Forrester Research, explained: "Maintenance is the most profitable part of the business. Because by year four or five [of the software contract] there's 60 per cent to 80 per cent profitability just on maintenance alone."

Maintenance fees are a substantial revenue generator for manufacturers of enterprise software, costing end users large sums each year. The rates pay for ongoing product development that provides them with regulatory updates, bud fixes and new product features, in addition to phone and web-based support when things go wrong.

Analysts suggest that maintenance fees can be responsible for almost 50 per cent of the total resources of most application vendors and the maintenance business is becoming increasingly profitable for vendors, as fees as a percentage of licences continue to grow.

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About Centennial Software

Centennial Software (www.centennial-software.com) is a leading developer of asset management and network security solutions with more than five million licenses sold to blue-chip organizations around the world. Centennial's growing portfolio of solutions helps organizations better manage their IT infrastructure, maintain compliance and minimize operational risks. Centennial products are available through a global network of approved resellers and market-leading OEM vendors. The company operates offices in the USA, UK, Germany, Sweden and Australia.

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