News Analysis: Spinnaker Expands JD Edwards Support With Versytec Acquisition
Versytec Acquisition Addresses Growing Demand For JD Edwards Support
Denver, Colorado based Spinnaker Management announced on March 6th, 2012 its acquisition of competitor Versytec. For those who remember their third party maintenance (3PM) history, Versytec was among the first firms to announce third-party maintenance services within a year after PeopleSoft acquired JD Edwards in July 18, 2003. Constellation estimates that Nashua, New Hampshire based Versytec had between 35 to 40 active 3PM customers.
Third-party maintenance describes support and maintenance offerings delivered by non-OEM providers. These vendors can provide a range of options from basic break/fix to bug fixes, performance optimization, tax and regulatory updates, and customization support. Keep in mind, 3PM does not provide access to upgrades and future versions of the OEM’s product. One big driver is the lower cost of delivery, as much as half the cost of the original vendor’s pricing. Today most customers pay in maintenance and support the equivalent of a new license every 5 years without achieving the value. For an average JD Edwards customer that upgrades every 15 years, that's three times the cost of the original license cost. In the latest Constellation research report, third party maintenance is one of many strategies to free up millions for customers to fund innovation.
The Spinnaker-Versytec deal is important for a few reasons:
- Many JD Edwards customers seek alternatives to Oracle's pricey maintenance fees. Software ownership costs continue to escalate as vendors accelerate their efforts to capture support and maintenance revenues. From inquiries, surveys, and conversations on the ground, many Oracle JD Edwards World and EnterpriseOne ERP customers seek options to buy-time as they consider whether they upgrade or migrate from their current version. Why? Most JD Edwards customers run stable environments and do not gain any value from the Oracle one-size fits all 22% support policy. Most customers seek phone support and tax and regulatory updates.
- The market needs more options and choices in the third party maintenance market. Many OEM vendors have gone to the extreme to eliminate third-party options for their customers. This anti-competitive behavior takes away choice for the customer. A bulked up Spinnaker creates a viable organization that has the critical mass to compete with Oracle. The combined entity provides third party support services to an estimated
100160 JD Edwards customers across the globe.
- Spinnaker Support offers a different approach to third party maintenance. Spinnaker couples its third party maintenance options with consulting services providing a one-stop shop for JD Edwards customers. Spinnaker also differentiates in its download methodology of customer entitled IP from Oracle. Spinnaker provides customers with a checklist of what to download prior to migration off Oracle support.
The Bottom Line: Users Must Advocate for Third-Party Maintenance Rights Across the Technology Stack
Vendors continue to conspire to remove third-party maintenance as an option for their customers. What's extremely disturbing is how vendors are working hard to prevent customers from having third-party maintenance options. The notion of perpetual software license rights should include the right to self-support software or engage in a third party to provide tax, regulatory, and additional updates. As many vendors try to close up these loopholes, customers are left in a no-man's land position of being forced into de-facto maintenance contracts with only the vendor.
End users need to band together and collectively demand clear rights to third-party support options. Based on survey data, most already believe or feel that 3PM should be a right. Otherwise, users will face a situation similar to automakers forcing drivers to only go to them for maintenance. If some of the industry's largest systems integrators actively entered the third-party support market, it would effectively disrupt the balance of power and put more money into the hands of the end-users and the system integrators.
Figure 1. Visualizing the High Costs of Support And Maintenance
(Right-click to see full image)
Need help with your software contract or working out the rationale for third party maintenance? Contact us throughout the vendor selection or negotiation process. We can help with a quick contract review or even the complete vendor selection. We provide fix-fee and gain sharing arrangements.
Let us know your experiences. Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.
How can we assist?
Buyers, do you need help with your apps strategy and vendor management strategy? Trying to figure out how to infuse innovation into your tech strategy? Ready to put the expertise of over 1500 software contract negotiations to work? Give us a call!
Please let us know if you need help with your next gen apps strategy efforts. Here’s how we can help:
- Providing contract negotiations and software licensing support
- Evaluating SaaS/Cloud options
- Assessing apps strategies (e.g. single instance, two-tier ERP, upgrade, custom dev, packaged deployments”
- Designing innovation into end to end processes and systems
- Comparing SaaS/Cloud integration strategies
- Assisting with legacy ERP migration
- Engaging in an SCRM strategy
- Planning upgrades and migration
- Performing vendor selection
Related Constellation Research
Scavo, Frank & Wang, R. “Big Idea: Constellation’s Business Value Framework.” Constellation Research, Inc. January 31, 2012.
Wang, R. "Best Practices – Three Simple Software Maintenance Strategies That Can Save You Millions" Constellation Research, Inc. March 7, 2012
Wang, R. “Best Practices: Why Every CIO Should Consider Third-Party Maintenance.” Constellation Research, Inc. August 7, 2012.
Wang, R. “Market Overview: The Market For SAP Optimization Options.” Constellation Research, Inc. May 11, 2011.
Wang, R. “Best Practices: The Case for Two-Tier ERP Deployments.” Constellation Research, Inc. February 28, 2011.
Related Resources And Links
20120318 Research Summary: Best Practices – Three Simple Software Maintenance Strategies That Can Save You Millions
20100419 Tuesday's Tip: Dealing With Pesky Software Licensing Audits
20090714 Research Summary: An Enterprise Software Licensee’s Bill of Rights, V2
20101214 Tuesday’s Tip: Dealing With Vendor Offers To Cancel Shelfware And Replace With New Licenses
20100308 Monday’s Musings: Decoupling Support From Maintenance – What Apps Vendors Can Learn From Microsoft Dynamics
20100222 Monday’s Musings: Why Users Should Preserve Their Third Party Maintenance Rights
20100104 News Analysis: SAP Revives Two-Tier Maintenance Options
20090210 Tuesday’s Tip: Software Licensing and Pricing – Do Not Give Away Your Third Party Maintenance And Access Rights
20090709 Tuesday’s Tip: Do Not Bundle Your Support and Maintenance Contracts!
20091222 Tuesday’s Tip: 10 Cloud And SaaS Apps Strategies For 2010
20091208 Tuesday’s Tip: 2010 Apps Strategies Should Start With Business Value
20091102 Best Practices: Lessons Learned In What SMB’s Want From Their ERP Provider
20091006 Tuesday’s Tip: Why Free Software Ain’t Really Free
20090504 News Analysis: Oracle Waives Fees On Extended Support Offerings
20080909 Trends: What Customers Want From Maintenance And Support
20080215 Software Licensing and Pricing: Stop the Anti-Competitive Maintenance Fee Madness
20090405 Monday’s Musings: Total Account Value, True Cost of Ownership, And Software Vendor Business Models
20090324 Tuesday’s Tips: Five Simple Steps To Reduce Your Software Maintenance Costs
20090223 Monday’s Musings: Five Programs Some Vendors Have Implemented To Help Clients In An Economic Recession
20091012 Research Report: Customer Bill of Rights – Software-as-a Service
20090910 Tuesday’s Tip: Note To Self – Start Renegotiating Your Q4 Software Maintenance Contracts Now!
20090721 Tuesday’s Tip: 3 Approaches To Return Shelfware
20090127 Tuesday’s Tip: Software Licensing and Pricing – Now’s The Time To Remove “Gag Rule” Clauses In Your Software Contracts
Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact sales (at) ConstellationRG (dot) com.
Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.
Copyright © 2001 - 2012 R Wang and Insider Associates, LLC All rights reserved.