The outrage over maintenance fees

Oracle and SAP have been in the hot seat as of late. An article in Barron's and a recent investment report blow the whistle on the companies 22 percent annual fees for upgrades and support. Given today's economy and tight IT budgets, why aren't the two companies cutting the enterprise a break?

Some experts, in an InformationWeek article, are questioning how long this rigid model can hold out. The publication offers three possible scenarios for the sky-high fees.

In the first scenario, SAP and Oracle keep their fees where they are. This would certainly keep Wall Street happy, because it keep earnings strong. As a result, author Bob Evans concludes, big customers will continue to feel trapped because dropping the service would be an "unacceptable risk."

In the second scenario, either Oracle or SAP finally folds to their unhappy (and increasingly poor) customers. Wall Street would shudder at this move and customers paint the provider as a hero. Evans hypothesizes that the model would be broken down into four different tiered levels, "ranging from bare-bones support for a 7 percent annual fee, to 12 percent for a bit more, to 18 percent for broad coverage, and on up to 22 percent for the platinum-level, all-included plan."

In the third scenario, a game changer for SAP and Oracle, the party gets crashed by a new enterprise player, says Evans. This is the big question mark in the vendor game and one that is increasingly likely as Silicon Valley notes distaste for the maintenance fees being imposed by these reigning leaders.

For more:
- read the article at InformationWeek.com

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