More ERP users are eyeing third-party support

IDG News Service - A growing number of ERP software users are considering a jump to third-party support providers, according to new data from analyst firm Constellation Research.

Over half (57%) of the 244 respondents in a survey conducted in the second quarter indicated interest in third-party support, compared with 42% in a study last year and less than 20% in a 2009 survey, said Constellation Research CEO Ray Wang. He spoke last month during a webcast sponsored by Rimini Street, which offers support for Oracle and SAP applications.

More than 90% of the respondents interested in making the switch cited cost pressures as a reason. Another 80% expressed dissatisfaction with the value they are getting from vendor-provided support.

Vendors such as SAP and Oracle derive a great deal of their revenue and profits from maintenance fees, which customers pay yearly in exchange for technical support and product upgrades. Companies like Rimini Street can't provide the product upgrades, but they claim that they give their customers more effective, hands-on help, as well as the regulatory updates, customization work and tweaks necessary to keep systems running.

Many ERP implementations are 11 or 12 years old now, and they're showing their age, Wang said. "Most of these systems were installed pre-Y2K. We were in a rush, and today we're suffering," he said. Moreover, many companies got a great deal on software licenses at the time, but those systems have turned into expensive shelfware, he added.

Toss in increasing demands from users for consumer-like experiences and tools, and enterprises are feeling serious pressure to do something with their SAP and Oracle backbones, according to Wang.

Money saved by moving to a third-party support provider could free up cash for add-on products, he said.

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.