Businesses can halve 'megavendor' software costs with third-party support

COVID-19, the Russian invasion of Ukraine, growing inflation, and the threat of recession driving adoption

Businesses can cut the cost of maintaining ageing enterprise software in half with judicious use of third-party support vendors, according to research outfit Gartner.

The analyst said that tech buyers should look for viable maintenance alternatives to vendor support for instances of software from IBM, Microsoft, Oracle, and SAP.

Financial disruption from COVID-19, the Russian invasion of Ukraine, inflationary headwinds, and the prospect of a global recession were all accelerating adoption of third-party software support for technologies provided by these "megavendors," Gartner said.

It found they made up 45 percent of all technology deals struck in North America, EMEA, and APAC in 2021, up from 27 percent a year earlier.

"In organizations with significant megavendor software portfolios, lower-priced third-party software support can offset a significant percentage of the year-over-year annual maintenance and support increases typically imposed by these software vendors," a Gartner research note said.

Third-party support offers an avenue for organizations wishing to extend the life of existing enterprise software investments when they see no technical or business reason to upgrade. For example, Oracle 12.1 database moved off mainstream support in July, leaving users with the prospect of upgrading to 19c or finding a way of supporting their existing systems.

"When third-party support is a feasible alternative, the significant software maintenance and support cost reduction opportunity can be a 'quick win'. It can help keep budgets flat by eliminating the ongoing year-over-year software vendor maintenance and support increases when organizations are challenged to meet cost-saving goals and initiatives," Gartner said.

Despite growth in the market, Gartner found there was plenty of headroom for further use of third-party support. Driving uptake were cloud migrations – essentially keeping the megavendor software portfolio up and running on perpetual software licenses until the switchover is ready.

The same reasoning applies for the migration to alternative vendors or solutions. In the case of end-of-support announcements, older software can still be used to support certain applications via a third-party specialist – doing so could not only reduce cost by 50 percent compared to the current software vendor standard maintenance, but also avoid highly customized professional service rates that software vendors would typically charge.

Gartner pointed out that organizations can "take advantage of the substantial opex savings and value-added services offered by the third-party market," which can help reduce software budgets, specifically software maintenance profit and loss. It also increases flexibility as third parties tend to offer a greater range of contractual arrangements, and may offer better access to specialist skills.

Alui, Rimini Street, Spinnaker Support, Support Revolution, and US Cloud make up the sample of the third-party support market reviewed by the research. ®