Chapter 7: Maintenance and Support

Overview

In negotiating maintenance and support provisions, the licensee should keep three questions in mind. First, what level of support do I need? Is this a critical application that requires 24X7 support and immediate response from the vendor? Or, is this a non-critical application for which a delay by the vendor in responding to a support call will not materially impact the licensee's enterprise? The licensee must assess the impact a failure in the software will have on its organization and ensure the support program it is purchasing will adequately address the licensee's requirements. It is on this first question that most licensees focus their negotiation efforts. The remaining two questions, however, are equally important, but frequently left as an afterthought in the negotiation.

The second question the licensee should ask itself in negotiating maintenance and support provisions is "what is my ability to renew support in later years?" Most vendor licenses provide no guarantee that the licensee will have support after the initial year of the contract. This is the approach used in Section 3. This means that the licensee could pay to license and install the software and find that it is not able to purchase support after the first year or, worse yet, that the vendor has abandoned the product. This is a costly mistake that many licensees have committed.

The final question is "what is the cost of support during renewal terms?" In most agreements this issue is not addressed or, as shown in the Section 3 of the vendor form agreement, the vendor can simply increase the cost of support at any time without any limitation on the amount of the increase. Such an approach will leave the licensee at the mercy of the vendor after having incurred the cost to license and implement the software. In one case, a licensee paid several hundred thousand dollars to license and implement a piece of software only to have the vendor increase the annual support fees after the first year by a whopping thirty-five percent.

In this chapter we discuss approaches to ensuring the licensee can comfortably answer these questions and negotiate reasonable protections in its license agreements.

The following sections of the form license agreement are discussed in this Chapter: 3 (Support and Maintenance).