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I believe that every year when most customers receive the renewal notice from a software vendor or Bond Consulting Services, the first question that comes out to their mind is “Is it really worth it to pay the software maintenance fee?” or “What happens if I don’t continue on software maintenance plan?” This sometimes might be a tough decision for a customer to make.

Here are some important facts of software maintenance plan you should consider and evaluate yourself before you make the final decision.

The biggest benefit of renewing the maintenance plan is the software updates or new version software release from ERP vendor. With a software maintenance plan you are entitled to receive them at no additional cost specifically for the software. ERP vendors spend significant sums of money on the R&D to improve the software functionality by incorporating best practices or processes for their ERP users, and the majority of R&D fund comes from the software maintenance plan revenue.

Once you cancel your maintenance plan, your organization will be no longer be eligible to receive the software updates and it becomes very unlikely that you will change the software to keep up with the business growth or expansion of your organization. As a result, your business needs are likely misaligned with the functionalities of the ERP system and users are likely to become frustrated with the system and start adopting their own business processes and workarounds outside the ERP system. This misalignment of your business needs to the system may accelerate the need to completely replace your ERP system, which can be more costly than the savings from cancelling the software maintenance plan.

Since most ERP users do not upgrade their system on every version software release and the average timeframe of new software version release is approximately 1 to 2 years, some of you might be tempted to let your maintenance plan lapse to save the cost and sign up again when they see the needs of upgrade. While the cost saving idea appears reasonable, the actual cost savings sometimes is not as much as you think. It’s a very common policy now that software vendors require customers to pay for the renewal fee owed for the lapsed period, normally up to 3 years, plus a penalty fee or late fee at the moment of re-enrolling their maintenance plan. The penalty or late fee charge may range from 18 to 25% additional on top of the re-enrollment fee. Therefore, it’s very important to understand the re-enrollment and penalty fee policy in order to do your cost saving calculation from cancelling the software maintenance plan.

Beside software updates, there are other benefits that come with a software maintenance plan such as access to free online training materials and knowledgebase websites. These tools can be very helpful for internal troubleshooting support or user training.

Again, the software maintenance plan is optional to customers after the first year of purchase. Customers need to understand all of the benefits and value behind the maintenance plan and not just looking at the dollar amount of renewal fee or the cost saving to justify the decision making. If you are continuing with a software maintenance plan make sure you are fully utilizing all of the benefits and value out of it. On the other hand, if you decide to cancel the maintenance plan, you should review your business needs and potential changes within your organization and plan ahead what you need to do keep up your system while you don’t have software maintenance plan in place.

David Gersten is a Sales Account Executive at Bond Consulting Services who is focused on Microsoft Dynamics AX, Dynamics GP, Dynamics CRM and Microsoft SharePoint solutions.

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