Marty Parker
Marty Parker brings over three decades of experience in both computing solutions and communications technology. Marty has been a...
Read Full Bio >>

Marty Parker | May 10, 2016 |


Maintenance Contracts: Vendors' Gold or Yours?

Maintenance Contracts: Vendors' Gold or Yours? Don't let your term agreements hold you back from taking advantage of new UC and collaboration technologies.

Don't let your term agreements hold you back from taking advantage of new UC and collaboration technologies.

The communications technology landscape is changing, and the future is undoubtedly going to be very different. No Jitter bloggers, including yours truly, tell us this change is coming, likely faster than we expect, in the form of UC as a service, new collaborative interfaces (Microsoft Yammer, Cisco Spark, Unify Circuit), communications-enabled business apps (, Micrososft Dynamics, and others), new gateway-based architectures, and mobile-first or mobile-only directions.

But your enterprise's ability to adapt and change may be held back by a major issue, a veritable boat anchor in the form of the maintenance contracts on your existing systems.

All Bundled Up
In most enterprises, maintenance contracts have terms of at least three years. And, in most cases, vendors bundle software maintenance with "upgrade protection" by which the enterprise pre-pays for major upgrades. This maintenance and upgrade bundle usually costs between 20% and 25% of the net price of the software licenses; the cost of hardware maintenance, without the pre-payment, is usually around 15% of the net new cost. This means your enterprise is essentially buying a new copy of the entire system every four to five years.

Moreover, these contracts have stiff cancellation clauses, usually one year's cost for termination or even downsizing.

In effect, vendors have a very rich and predictable cash flow. In addition, the termination or modification penalties make switching systems quite difficult. If the vendor gets word of a change, the contract renewal may suddenly turn much less congenial, often with lower discounts or less-attractive terms. Time and again, we see our clients limited to just doing their best to negotiate one or two percentage points of discount every three years and continuing on with the same core communications system.

In this situation, many enterprises find they are duplicating the communications technologies in their product portfolios. The new UC and collaboration technologies are so compelling that the enterprise either must use or at least try them. What's more, vendors bundle these technologies in ways that provide a very low incremental cost, such as enterprise agreements combined with software or networking products.

A Fighting Chance
This tectonic collision may seem problematic and even earth-shaking. But it's really an opportunity for your enterprise. Let's look at a couple of options.

A primary option is to move some portion of the communication system's users -- you know, the enterprise employees -- to the new technology before it's time to begin bargaining for a maintenance contract renewal on the old platform. Usually, this first move is only for 30% or 40% of the employees based on the usage profiles that have the least need for old technology feature sets and the most to gain from the new system's capabilities (see related article).

By planning ahead, an enterprise can usually fund the costs of the migration for a specific set of usage profiles entirely by reductions in the legacy platform maintenance agreement, either in the same or the following year. The negotiations over the reduced size of the traditional platform maintenance agreement may be tough, but that vendor will realize it is at risk of losing it all, so is likely to be at least "rational" in the contract renewal.

Another option, even if the enterprise is not ready to move to the new technology, is to continue with the same size of traditional technology system, but change the enterprise plans for the future. In other words, buying the upgrade protection -- pre-paid software replacement -- on the existing system isn't necessary.

Assuming the enterprise upgrades the existing system to the current software level before the maintenance contract date, the latest software level should be vendor-supported for at least five years after the maintenance contract renewal. This option may be ideal if an enterprise has a clear expectation of moving all, or almost all, of the enterprise users and communications functions to the new technology platforms. The saving of 40% to 60% of the software maintenance costs per year is very likely to fund the migration to the new platform and have some net savings for other budgetary needs or bottom-line savings.

A third option, which many seem to embrace, is just to keep renewing the traditional communication system maintenance agreement, including the software upgrade add-on, and hope that the incumbent vendor will be sufficiently innovative. That may seem viable on the surface, but remember that the communication technology landscape is changing and the innovation seems be coming from new providers.

Your enterprise may have other management approaches in your maintenance contract strategy, but, at a minimum, it is smart to at least have a real strategy. It will be worth it, especially if you plan ahead!


October 24, 2018

With disparate workplaces and ever-expanding volumes of information to manage, the challenges for collaborating effectively are only intensifying. Many critical applications are not integrated, and

October 10, 2018

Businesses are growing across international borders quicker than ever, but scaling operations to follow suit can be a harder, longer process.

This webinar focuses on scaling your next-generat

September 26, 2018

Join Kevin Kieller, Microsoft UC&C expert, along with Ribbon Communications and Polycom, for an update on Microsoft Ignite, and a focus on critical things you need to know about your voice deployme

March 12, 2018
An effective E-911 implementation doesn't just happen; it takes a solid strategy. Tune in for tips from IT expert Irwin Lazar, of Nemertes Research.
March 9, 2018
IT consultant Steve Leaden lays out the whys and how-tos of getting the green light for your convergence strategy.
March 7, 2018
In advance of his speech tech tutorial at EC18, communications analyst Jon Arnold explores what voice means in a post-PBX world.
February 28, 2018
Voice engagement isn't about a simple phone call any longer, but rather a conversational experience that crosses from one channel to the next, as Daniel Hong, a VP and research director with Forrester....
February 16, 2018
What trends and technologies should you be up on for your contact center? Sheila McGee-Smith, Contact Center & Customer Experience track chair for Enterprise Connect 2018, gives us the lowdown.
February 9, 2018
Melanie Turek, VP of connected work research at Frost & Sullivan, walks us through key components -- and sticking points -- of customer-oriented digital transformation projects.
February 2, 2018
UC consultant Marty Parker has crunched lots of numbers evaluating UC options; tune in for what he's learned and tips for your own analysis.
January 26, 2018
Don't miss out on the fun! Organizer Alan Quayle shares details of his pre-Enterprise Connect hackathon, TADHack-mini '18, showcasing programmable communications.
December 20, 2017
Kevin Kieller, partner with enableUC, provides advice on how to move forward with your Skype for Business and Teams deployments.
December 20, 2017
Zeus Kerravala, principal analyst with ZK Research, shares his perspective on artificial intelligence and the future of team collaboration.
December 20, 2017
Delanda Coleman, Microsoft senior marketing manager, explains the Teams vision and shares use case examples.
November 30, 2017
With a ruling on the FCC's proposed order to dismantle the Open Internet Order expected this month, communications technology attorney Martha Buyer walks us through what's at stake.
October 23, 2017
Wondering which Office 365 collaboration tool to use when? Get quick pointers from CBT Nuggets instructor Simona Millham.
September 22, 2017
In this podcast, we explore the future of work with Robert Brown, AVP of the Cognizant Center for the Future of Work, who helps us answer the question, "What do we do when machines do everything?"
September 8, 2017
Greg Collins, a technology analyst and strategist with Exact Ventures, delivers a status report on 5G implementation plans and tells enterprises why they shouldn't wait to move ahead on potential use ....
August 25, 2017
Find out what business considerations are driving the SIP trunking market today, and learn a bit about how satisfied enterprises are with their providers. We talk with John Malone, president of The Ea....
August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.