Category Archives: maintenance

Third Party Providers

Happy New Year!

I saw an interesting article today that high-tech vehicles were posing problems to some mechanics.  The mechanics claim that they can’t afford the thousands of dollars that are necessary for them to obtain the specialized diagnostic tools for each auto manufacturer.  The manufacturers are claiming that they’re trying to protect their intellectual property.

Sound familiar?  Yup, it’s exactly like the issues Frank Scavo and Ray Wang have written about with regards to third-party software providers being blocked from performing various maintenance/implementation tasks by the contracts and software licenses and services agreements of certain primary vendors.

On the automotive side, it’s apparently gotten to be such an issue that there’s a congressional bill called the Motor Vehicle Owners Right to Repair Act of 2009.  The stated purpose of this Bill is to “protect the rights of consumers to diagnose, service, maintain, and repair their motor vehicles”.  What’s really interesting are the Bill’s findings, among which say that:

  • Motor vehicle owners are entitled to choose which service provider will diagnose, service, maintain, or repair their motor vehicles.
  • Promoting competition in price and quality… will benefit consumers.
  • Only service technician with the necessary tools and information can access the computers to perform diagnosis, service, maintenance and repair…

And the requirements of the Bill, specifically:

  • Duty to Make Tools Available:  The manufacturer of a motor vehicle sold, leases or otherwise introduced into commerce in the United States must offer for sale to the motor vehicle owner and to all service providers on a reasonable and non-discriminatory basis, any tool for the diagnosis, service, maintenance, or repair of a motor vehicle, and provide all information that enables aftermarket tool companies to manufacture tools with the same functional characteristics as those tools made available by the manufacturers to authorized dealers.
  • Replacement Equipment: The manufacturer of a motor vehicle sold, leased, or otherwise introduced into commerce in the United States must offer for sale to motor vehicle owners, and to all service providers on reasonable and non-discriminatory terms, all equipment for diagnosis, service, maintenance, or repair of a motor vehicle.

The only thing the Bill protects for the manufacturer are things that are actual trade secrets.

Wow.  Of course, there are a LOT of people (and more specifically, a lot of trade association and advocacy groups) behind this Bill.

Could you imagine what would happen if this passes and someone realizes that software in cars isn’t that dissimilar to plain old enterprise software?  If only there was a trade association group for buyers of enterprise software apps.  😉

But let’s talk about the other side of the issue for a moment.  Do consumers have a right to have third-party companies provide service?  A right?  No.  I don’t think there’s a right to be able to have third-party providers.  [Keep in mind, when we’re talking about rights, we’re talking about things equal to “life, liberty and the pursuit of happiness…”.]

Absent a right, should third-party providers still be allowed/encouraged?  I’m really torn on this.  On one hand, I’m all in favor of things that inspire commerce.  I like behaviors that create business, allow more people to work… and of course, things that drive down costs and dissipate apparent monopolies.  On the other hand, an individual or organization who creates something should be able to protect their idea/invention and not have to give up the secret sauce simply so that other people can benefit.  But there seems to be a line somewhere that once you cross it should allow for third-party companies to fill available niches.  Maybe it’s where the original vendor is no longer able to provide a quality-level of service.  Maybe it’s a situation where the original vendor is charging exorbitant rates.  I’m not sure.

Anyone have a solution?

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As the year draws to a close

Hopefully, most of you are done with work for the year.  But for those of you about to close end of year, firesale-type deals in the remaining 6 days of the year (the end of the year is even a Thursday, so you don’t have to “work” a weekend if this is your fate), here is a list of articles on how to get the most out of your transaction time:

Start with fundamentals on negotiation.  Think outside the box.

Then go through the basics on firesales.  If you want more, buy the Firesale Concall Recording.

Understand pricing, and when it might pay to avoid maintenance costs.

Start your deals from good templates.

And, lastly, consider the reasons for agreeing to renegotiating deals.

To my faithful readers: Thank you for listening to me for another year.  I hope you have a very joyous holiday season and a happy New Year.  See you in 2010 (unless something really awesome in the licensing world happens between now and then).

This Week on The Web 2009-09-13 (my birthday edition)

It happens to be my birthday weekend and between eating some great food, playing Guitar Hero with my wife and hanging with the family, these are the things that happened around the web this week – maybe you already read about them, maybe you need to again – there were some REALLY great discussions going on.  Come join the party on twitter (follow me here and you’ll join the conversation live.)

I also realized that many of you might have no idea what you’re seeing below.  Sorry.  These are “tweets”, 140 maximum character messages sent via Twitter.  Within the Twitterverse individual users follow others and have followers (think of it like overlapping Venn diagram circles).  To read a tweet, you have to wade through a bit of jargon used to make the most of the 140 character limitation.  “RT” for example, is shorthand for “Re-tweet” and the @____ is the username of some other individual on Twitter.  Combined together, then, “RT @_____” means that someone else wrote a tweet that I found important and I now want to forward along to my followers.  The URL’s are then also shortened by shortening services like bit.ly to make the most of the character limitation, too.  Lastly, you might see “hash” identifiers “#______” which are ways to tag tweets of a particular flavor for easy searching later and “<” which means that I am commenting on what came before it.

License Resale

Vinnie Mirchandani at deal architect pointed out a Ray Wang article on the resale of unused licenses.  My thoughts are in the comments on Ray’s article.  But generally speaking, regardless of what Ray suggests, you can’t do it in the US (or the rest of the Berne Convention countries) under most licenses which have express prohibitions against it (you can almost always contract away your rights).

And, even if you could, your organization probably doesn’t have tracking enough to make it possible – just remember that if you overuse your permitted license count, chances are there’s another provision in your license that allows the vendor to charge you (perhaps at non-discounted pricing) for the overage.

What I DO like about Ray’s suggestion is that idea that you should try to negotiate for a recapture of maintenance fees on unused licenses.  If you can’t resell them, the least you can do is take an annual count and only pay maintenance on the ones you’re using.  There is, of course, trouble with this thought, too – as there are some vendors that used to allow this (the last one I remember was Autodesk).  But the trouble is that you can get into a situation where you only upgrade SOME of your licenses to the current version because not all of them are currently covered by maintenance and the upgrades provided under such program.

 

Don’t Pay for Enterprise App Maintenance

I completely agree with David Dobrin.  It’s hard to convince people to do it, of course.  But read his logic.  1/200th.  I think that is about the right threshold – it might even be a little low (my life insurance policy is about 1/500th… my car is about 1/166th – but doesn’t take personal injury into account… my home is about 1/1600th).

Hmmm… the more I think about this, the more I think it would be really easy to convince my clients of this.  Anyone have a counter argument?

Salesforce.com calls for End of Maintenance

Below is the contents of an internal salesforce.com memo CEO Marc Benioff shared with Vinnie Mirchandani (and posted on his blog: deal architect).  I’m pasting it here for simplicity’s sake and because of the power of the message itself.

“For ten years, we’ve been driven by a simple vision: The End of Software.  Now it’s time to take on a new challenge: The End of Maintenance.

Let me tell you about a customer that I met on our Cloudforce tour. This customer currently uses Siebel software to run her call center.  She pays more than $15 million a year for the privilege of having to implement the updates that Siebel sends her.  That does not include backup. Or disaster recovery. And of course, it does not guarantee that she will be using the latest technology.  The maintenance agreement only assures her that her outdated software will continue to work.  She is paying tolls on a road to nowhere.

We can help her, and many other customers, and deliver much more for a fraction of what they currently pay in maintenance. It’s time to open up a new front in “The End of Software”– one that is long overdue.

It’s time for The End of Maintenance.

Every year, companies spend billions on maintenance fees and get relatively little in return. Maintenance fees cover updates that are mostly  patches and fixes, but they stop far short of the kind of innovation every that enterprise needs to survive.  Companies pay to keep the past working and they end up doubling down on technology that can never keep up with their needs.  The fees that companies pay have actually been rising, from something like 17% a few years ago to numbers more like 22% today. Every four or five years, companies are paying for their software all over again.

It’s time to set these businesses free and make them successful in the Sales Cloud,  Service Cloud and on our Force.com platform.

Our new mission begins at a critical time in the economy, when companies are questioning conventional wisdom as they never have before.  That, of course, extends to their IT budgets as well. The CIO is in a tough spot right now.  Corporate budgets are tightening.  And our rivals in the legacy client-server world are using this opportunities to extract more money from their customers by raising maintenance fees.  I call this phenomenon “the compression of IT” and it resonates with just about every CIO I speak with these days.

We have a better vision. We sell our customers a service and every customer is able to use the latest. Innovations are included. Upgrades are automatic and invisible. Customers’ intellectual property of customizations and extensions is rigorously preserved, and carried forward without disruption.

The service gets better, not just less buggy. That’s not what people are getting for all those fees that supposedly buy them “maintenance.”

It’s time to set these business people free: to give them the experience of being wildly successful in the Sales Cloud, the Service Cloud, and in their own unique applications that they can build on our Force.com platform. This is the time to do it, because this is when people need it: their IT budgets are tight, their business situations are critical, and their old-world software vendors are taking care of themselves instead of meeting the needs of their customers.

We’ve raised people’s expectations for better alignment of business value with IT cost. We’ve earned our leadership position in enterprise cloud computing. It’s time for us to set people free from paying more and more to get less and less. It’s time for The End of Maintenance.

Aloha,

Marc”