Cash-Strapped Agencies Seek Lower IT Maintenance Fees

Some revenue-starved municipalities are targeting ongoing maintenance fees paid to IT vendors as an area for cutting costs.

by / November 2, 2010

Letting Contracts Lapse

A solution to high maintenance fees among some governments is to do the maintenance themselves or subscribe to scaled down service plans, according to “New Normal” Success: A CIO Survival Guide, a white paper from Government Technology’s Digital Communities Program, a network of public- and private-sector IT leaders that focuses on local government issues.

“If you bought a good product and are any good at using and managing it, you shouldn’t need a lot of help,” said Michael Armstrong, CIO of Corpus Christi, Texas, in the white paper.   

Irey took that approach in Overland Park. She said she normally paid one of her vendors $30,000 annually for maintenance. To save money, she told the vendor to simply sell her spare parts and shifted the maintenance duties to her staff. As a result, the city paid only $10,000 to the vendor in 2009.  

Testoni said eliminating maintenance fees is one option SAP points out to cash-strapped governments, but he discouraged that route. “You lose the ability to get the product enhancements from us,” he said. “You lose the ability to file messages or engage with our support team when you’re having difficulties with something that could be product related.”

And restarting those services could involve penalties

“Letting contracts lapse is very dangerous, and if you want to go month to month, prices will go up,” said Paul Christman, vice president of state and local governments and education sales for Quest Software, in the Digital Communities paper. “Customers who stop paying now will have to negotiate and work with their vendors in the future to re-establish support.”

“Maintenance payments are closely tied to the software’s production readiness,” added Mike Bilardo, director of government solutions for Hyland Software, in the white paper. “Today’s maintenance payments fund tomorrow’s new releases and increased functionality.”

The increased functionality argument can ring hollow, however, to governments lacking the resources to take full advantage of the functionality of their current software installations, said Bexar County’s Maras.  

Lowering Service Expectations

Settling for lower service standards in noncritical programs is a compromise facing numerous government agencies.  

“We talk about service-level agreements, and I think there should be an expectation agreement out there — the expectation being maybe it will take a day now for someone to come and fix your PC. It used to be you would call, and somebody would show up,” Leurig said.

Irey suggested maintenance for software used by building inspectors might be a good fit for that approach.

Christman cautioned in the white paper that lower service standards could result from vendors slashing maintenance fees.  

“Bugs will take longer to get fixed. Expansion to new platforms will be delayed,” Christman said. “We are just like our government customers. We are trying to figure out how we can best maintain a high-level support capability when government is facing difficult decisions about how much maintenance it can afford. Government and industry are in it together. Our success is closely linked.”


Andy Opsahl

Andy Opsahl is a former writer and features editor for Government Technology magazine.

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