An increasing amount of Scyllogis’ business is taking over the support and ongoing development of existing package systems within the insurance industry; Scyllogis provide an attractive  alternative to the original vendor for many reasons. Therefore, we were very interested to spot that Oracle were trying to put a stop to SAP performing a similar service, via a lawsuit in the US.

The Oracle Corp. lawsuit accuses SAP AG of "corporate theft on a grand scale" for the illicit downloading of Oracle software by SAP subsidiary TomorrowNow Inc. Texas-based TomorrowNow provides third-party software maintenance to Oracle customers.  At the heart of the Oracle case is the economic value of the maintenance contract in a mature software industry and the viability of third-party support, said Gartner Inc. analyst Dan Sholler. Germany-based SAP and Redwood City, Calif.-based Oracle are going head to head because SAP's TomorrowNow provides maintenance support for Oracle's PeopleSoft.

Analyst Ray Wang doesn't pull punches. He said the current situation stinks, likening it to IBM's lock on mainframe hardware in the 1970s. Major software vendors are not giving third-party maintenance providers the access necessary for providing a high level of support, in Wang's view. As a result, CIOs are held hostage to annual maintenance fees that can run to 25% of the contract.

"Think of it, a million-dollar contract -- every year they're spending $250,000 of support," said Wang, who covers business software trends at Forrester Research Inc. in Cambridge, Mass.

Is it worth a quarter of a million? Not by year five or six, Wang said. "The major bugs are fixed. You're getting some functionality, but most companies would say they are not getting that value. If someone comes along and can cut those maintenance costs in half, that is a great deal," Wang said.

Choosing a maintenance provider should be the software buyer's prerogative. But because of the way most software licenses are negotiated, software owners are often owners in name only, in Wang's view.  "If I could stop paying maintenance costs and sell those licenses, that would be very interesting. If I could use another provider to give maintenance at half the cost, that would be very compelling, but we don't have either," Wang said. "We don't actually have a perpetual license."

Not every expert agrees. AMR Research Inc. analyst Jim Shepherd said the premise of third-party maintenance is that the contractor, hired to act on the company's behalf, has exactly the same right to access as the company's employees and this is certainly the view of Scyllogis’ Director Colin Whickman: ‘A lot of packages are sold as being “flexible” with a proposition that the user is able to extend and manipulate the functionality themselves – we just do that for them because they don’t necessarily have the detailed technical knowledge’.

Shepherd isn't exactly a shrinking violet when it comes to taking on big software vendors like SAP and Oracle. At an industry conference last fall, Shepherd warned a roomful of CIOs that consolidation in the enterprise software industry is threatening innovation.  But software maintenance?  "I don't feel up in arms about it at all," Shepherd said. "Software is different from other kinds of assets. It's constantly changing, and it has to."