SAP clients who have recently had to face the fact that SAP "just isn't that into you" with its 30% hike in maintenance fees can, for now, only wonder what would happen if maintenance costs were tiered according to needs, usage, and merit.
Dennis Howlett, who attended (via Internet) Lawson Software's CUE09 reports that "...the company has introduced a tiered set of maintenance charges: bronze, silver and gold. Each has different price components that depend upon what the individual customer wants in terms of support and value."
One would think that such a differentiator would be highly touted but further analyst digging revealed a few clouds of dust around what glitters like gold.
From Frank Scavo:
"...with a number of financial analysts in the room, Lawson finds it important to reassure Wall Street that its maintenance revenue stream is not threatened. A couple of us later checked with Lawson's PR group concerning pricing for Lawson's two tiers and found that Silver is priced annually at 22% of software license cost, while Bronze is just a two point discount, at 20%. We were underwhelmed, to say the least."
While it is always difficult to glean apples to apples from these firms' annual reports, Lawson's 2008 report is challenging because of the split between maintenance and consulting. http://snurl.com/gmmo1
All the same, on page 39, we find a report of $336.8M in revenues for 2008 maintenance. On page 41, we find costs of 2008 maintenance of $65.9M. And further down, there it is: Gross margin, maintenance: 80%.
In the restaurant business, food is served at a marginal loss and profit is derived from the wine list. (This is why a waiter grimaces when six guests order salads and bottled water.) It appears that in the enterprise software business, maintenance is the wine list and clients are ordered to drink from it. Yes, at Lawson too.