7 thoughts to take into account before renewing your support contract
When you purchase software licenses you typically purchase support and maintenance for these licenses as well. Support and maintenance services differ from publisher to publisher in terms of duration, benefits or fees. But in essence all offer (a) the right to perform updates, (b) the right to apply bug-fixes, (c) the right to apply security-patches, (d) the right to reach out to support professionals and to leverage the publishers knowledge repository to help your business keep up and to avoid costly outages and loss of productivity.
These services are offered based on a support and maintenance contract which, as a general rule, has to be renewed annually. When the time to renew your support contract has come, it also brought the opportunity to review and decide upon future actions: should you keep it as it is, terminate it, modify it?
Considerations for support renewals
In order to help you to take the best decision, we created an overview of the thoughts you should take into account before signing the support contract renewal.
- Do you have legacy licenses currently under support? Most of the time, support and maintenance cost is a percentage (approximately 20%) of the (net) license value that increases annually unless otherwise negotiated. Legacy licenses refer to license that historically were sold separately as a standalone product, but which are now bundled/included as packages in another license. As an example, SQL Plus was a product that Oracle sold in the past as a separately licensable product which later on became part of the Oracle Database license itself.
- Negotiate the support indexation rate (CPI). If you just purchased licenses with support, you can negotiate that there will be no indexation for the first (usually up to) three renewals, if the same amount of support services is purchased. That means you commit in advance that you would pay the following years the support for the same number of licenses and in return you won’t have an increased support maintenance fee.
- Do you really need support? This is a hard question and you should really think it through. Keep in mind that once you decide to drop support, you drop all the benefits that come with it, not only the fees that you would pay. Besides, if after a while you change your mind and want to get back on support, you will pay a reinstatement fee and support fees for the years that you lapsed support, and this can be very expensive.
- Do you have a functional survivorship clause? The name of the clause can differ depending on the publisher, but the essence is that if the publisher no longer supports the licensed functionality in a product (even if renamed or bundled) and you pay for maintenance and support, you should get the follow-on product at no additional cost.
- Is partial termination possible? Some publishers only allow you to terminate support on the entire license estate or for an entire license set. But a partial termination of support could be negotiated without an increase on support fees for the remaining support. The clause usually stipulates that the client may, once per calendar year, partially terminate the support in relation to certain software products. This might come in handy if you are faced with reduction in staff or decrease in revenue and such partial termination of support could help cut significant costs.
- Do you have the correct level of support? Many publishers offer different levels of support and a business in continuous change can have different needs from one year to another, so you should make sure your support and maintenance covers everything, but not more than your business needs.
- Do you need to consolidate your support contracts? You can either have a support contract for different sets of licenses, for multiple sets or for your entire license estate. It can be easier to have your support contracts consolidated into one or at least to bring them all to a single termination term.
The support and maintenance agreement is an important part of your business and should be carefully reviewed and negotiated in order to have the best outcome possible. The information encompassed in such contracts can be overwhelming, but with the right support you can make the process of contract renewal a smooth and favorable one.
Since 2015, Roxana is a Software Entitlement Specialist focused on educating clients on licensing issues with Oracle, SAP and Microsoft. In her role, she works with customers to assist them in understanding and improving their software environment by reviewing their software license agreements and provide them advice regarding legal and financial risks. With a legal background, she also helps customers identify legal weaknesses in their contracts and optimize them.