In our previous posts, we have reviewed the need for:
And in this post, we will discuss the need for caps on the Annual increases for Maintenance and Support Services.
What is a Support Cap? A support cap seeks to place limits on the compounded effect of annual increases to the costs of the annual maintenance and support services fees beyond the Maintenance Freeze term.
Why is it Important? If there is no language to govern the amount of increase after the Maintenance Freeze (#11 in our list) term, the costs of annual maintenance and support services can skyrocket and quickly get out of control. The standard Oracle contract does have limits on annual maintenance and support services cost increases, but those increases are high, and they are termed. After these support increase caps expire, we have seen annual costs increase by 20% or more. Getting support caps that limit the amount of compounded annual increases to the maintenance and support services fees is a reasonable negotiation point.
After all, the supplier’s cost to support a customer actually go DOWN, quite significantly, beyond the first year of deployment. What’s more, the level of research and development into delivering new product functionality significantly trails off after the major features are released. One final nail in the coffin for Oracle’s argument, is the fact that Oracle covers the costs of R&D in the cost of the license sale, and not in the provisioning of product maintenance.
We suggest clients push hard for a low support cap beyond the maintenance freeze and treat each new additional purchase as an opportunity to extend both the Price Hold and the Maintenance Freeze for all products in the Oracle licensed estate. Clients are advised to agree to no more than a “CPI or 3%, whichever is less” provision that caps the amount of support cost increases beyond the maintenance freeze term assuming those other provisions are agreed to by Oracle.
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