Published: 23 August 2021
Software is the second-highest IT spend category industrywide, which drives sourcing, procurement and vendor management leaders to analyze cost savings opportunities offered by third-party providers. Use this guide to identify options that can reduce your software maintenance costs by 50%.
Sourcing, procurement and vendor management (SPVM) leaders who research and analyze all viable maintenance options for their IBM, Microsoft, Oracle and SAP software are well positioned to recommend cost optimization alternatives to their stakeholders.
Comparing the third-party software support (TPSS) offerings to the support policies and contract terms governing the IBM, Microsoft, Oracle and SAP products reduces the risk of selecting a third-party provider that has lower pricing but insufficient service offerings.
SPVM leaders reduce cost and operational risk when they engage stakeholders for a TPSS risk-benefit analysis and then arrange proof of concept (POC) engagements for the providers to showcase their service offerings and support capabilities.
SPVM leaders contracting IT services and solutions with a goal to optimize costs for IBM, Microsoft, Oracle and SAP should:
Use the reference table and services described in this guide to evaluate TPSS as one of the options to reduce hefty software maintenance costs across these four vendors’ software portfolios.
Compare TPSS offerings to the maintenance and support policies and contract terms governing their organizations’ current IBM, Microsoft, Oracle and SAP software as a key exercise when conducting the risk-benefit analysis for moving to TPSS.
Send RFPs to all viable TPSS providers discussed in this guide to obtain information on their services and pricing. Request TPSS providers to provide at least three references and agree to POC engagements to ensure their services meet current and long-term support needs.
Independent third-party software support providers give organizations a lower-cost alternative to the escalating maintenance, support and consulting service fees charged by IBM, Microsoft, Oracle and SAP. There are six independent third-party software support providers that offer technical support services to replace the maintenance and support programs from IBM, Microsoft, Oracle, and SAP (see Figure 1).
Independent TPSS service providers are not authorized channel partners. They offer independent support. The independent TPSS providers have no relationship with the original equipment manufacturer (OEM) or independent software vendor (ISV) and, as a result, cannot access intellectual property, software updates, firmware updates or security advisories, or obtain OEM/ISV Level 3 or backline support.
TPSS alternatives offer both cost-cutting and cost avoidance opportunities for organizations to reduce current and future year operating expenditure (opex) spend and budget. Figure 2 illustrates examples of the key offerings and capabilities of the six independent TPSS services providers discussed in this guide. These capabilities, further defined in the Market Introduction section, should be evaluated as part of the feasibility study to analyze cost savings opportunities to reduce the rising maintenance and support fees from IBM, Microsoft, Oracle and SAP (henceforth referred to as the “megavendors”).
When TPSS services are analyzed and deemed viable from a risk-benefit standpoint during a feasibility study, organizations are able to take advantage of the substantial opex savings and value-added services offered by the third-party market to:
Reduce software budgets, specifically software maintenanceprofit and loss (P&L) operating expense. The average annual savings is typically 50% when comparing TPSS services costs to the annual maintenance and support pricing models and policies of the megavendors.
Customize contracts for increased flexibility. Organizations look to third-party providers to increase flexibility in their software maintenance and support contracts, allowing them to opt out of new and future versions and release upgrades if these are unnecessary and costly for the business.
Provide specialized services to support customized code, modifications and unique product-specific requirements as well as offer improved SLAs.
Customize agreements for shorter-duration terms than the typical megavendor annual maintenance contract commitment requirements. TPSS providers are often willing to offer short-term and month-to-month support for special product-specific needs under customized service arrangements and contracts.
Use the lower-priced TPSS proposals as leverage when negotiating with software vendors. TPSS services continue to threaten the software vendors’ maintenance and support revenue stream. This enables procurement to use these lower-priced proposals for bargaining power when negotiating with some of these megavendors.
Gartner client inquiries related to software support for IBM, Microsoft, Oracle and SAP increased more than 50% over the past 12 months, and the TPSS market growth continues with an average net new sales growth of30% over the past five years. Based on this steadily increasing TPSS market growth, coupled with the increased interest in these support offerings,Gartner predicts that this market will see both the emergence of new TPSS providers as well as new and expanded service offerings by the existing six providers.
Gartner’s 2021 ITKey Metrics data reflects that software is a significant spend across industries and ranks as the second-highest spend category over the four-year period of 2017 to 2020 (see Figure 39 in ).In organizations with significant megavendors software portfolios, lower-priced TPSS can offset a significant percentage of the year-over-year annual maintenance and support increases typically imposed by these software vendors.
Third-party software support deals comprise more than 20% of all technology deals negotiated across North America, EMEA and APAC. The 2020 Gartner Sourcing, Procurement and Vendor Management Survey reflected a significant percentage of third-party software support vendor negotiations across all three regions. This can be somewhat attributed to the financial disruption imposed by the COVID-19 pandemic but also due to the continued growth of this market. 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.
The TPSS provider market remains relatively small, with six providers identified and actively tracked by Gartner. While the number of providers is limited, the majority of services offered are mature and continue to be enhanced and expanded to offer additional service categories (see the Market Introduction Section for details on each provider’s service offerings).
Several factors will contribute to the continued growth in the TPSS market, which are illustrated in the five scenarios below:
Scenario 1: Cloud migrations — During a migration to cloud, when phasing out some or all of the megavendor software portfolio is part of the migration plan, perpetual software licenses can continue to be used. This can occur when the customer-entitled version of the software can support the needs of the organization until the cloud migration cutover date. The customer-entitled version is the last version that was announced and made generally available by the vendor when the end-user maintenance and support was terminated. However, end users should ensure they access and review vendor website policies and read their contracts and support policy handbooks to make sure there are no terms that contradict this standard support policy. When version upgrades are no longer needed during these cloud migrations, the TPSS providers can offer technical support for the customer-entitled version so organizations can realize the average 50% cost reduction noted above. This analysis should be part of the cloud migration planning checklist and total cost of ownership (TCO) analysis.
Scenario 2: Migration to alternative vendors or solutions — When new vendors or alternate solutions are selected to replace on-premises software products, third-party support can be analyzed to determine if a viable option is to use software with perpetual licenses under the customer-entitled version until the migration cutover date, and beyond, as necessary. This TPSS option should be part of the organization’s product replacement migration analysis and planning checklist.
Scenario 3: Low-value maintenance evidenced by low-frequency technical support tickets/incidences — The historical volumetric analysis of all help desk and service desk technical support and incident tickets should be analyzed every six months. This analysis helps to determine the ROI when comparing the value received to the annual cost paid for the vendor maintenance and support service. This analysis should include the frequency of support calls, type of support, severity level, resolution time and results, and incident ticket close data for each of the software products in your megavendor portfolios. For low-value, low-incident software product support findings, TPSS services should be considered as an alternative for cost-saving opportunities.
Scenario 4: End-of-support announcements/notifications by software vendors — Situations can exist where older-version software is still being used to support certain applications, but will no longer be provided by the megavendors without a customized support agreement and for an additional fee. TPSS services should be evaluated to support these older-version products. It is a standard service performed by most TPSS providers. This would not only result in the average 50% cost reduction compared to the current software vendor standard maintenance and support fees but avoid paying high customized professional service rates that software vendors would typically charge after the end-of-support date. TPSS providers will typically commit to supporting older legacy software versions for 15 years — and in some cases, even longer.
Scenario 5: Absent or expiring maintenance increases caps for price protection in contracts — In some cases, no price protection exists for ongoing maintenance and support in vendor contracts. In such cases, particularly with the three- to five-year term multiyear commitment contracts (e.g., enterprise license agreements [ELAs], EAs and unlimited license agreements [ULAs]), there is high risk of escalating maintenance and support costs or end-of-support announcements during these multiyear terms. If there is no price protection language in your contract, or if the price increase protection is higher than the current consumer price index (CPI) rate, TPSS services should be evaluated to compare the TPSS pricing to that of the vendor renewal proposals. This should be done at least six to nine months before the expiration date of these multiyear contracts. A term of six months minimum is recommended to ensure there is sufficient time to evaluate the TPSS services and pricing, and to give adequate notice to the incumbent provider.
The vendors listed in this Market Guide do not imply an exhaustive list. This section is intended to provide more understanding of the market and its offerings.
The six TPSS providers that offer independent third-party software support for IBM, Microsoft, Oracle or SAP products are Alui, Origina, Rimini Street, Spinnaker Support, Support Revolution and US Cloud(see Note 1). The types of services each of these six providers offer, and the vendor products they support, are identified in the table and provider-specific summaries that follow.
Table 1 provides detailed information on each third-party software support provider. Use this table, in conjunction with the vendor profiles, to compare and contrast providers’ offerings by the software vendors’ products they support.
Note: This guide focuses on IBM, Microsoft, Oracle and SAP software only. The vendor profiles do not include service offerings by the TPSS providers for other software.
Company Website: www.alui.com
Headquarters: Hampshire, U.K., and Stamford, Connecticut, U.S.
Fiscal Year End: 31 December
Number of Permanent Employees in Support Services: Not provided
Number of Current Customers: 97
Certifications to International Standards: Not provided
Overview:Alui offers third-party technical support and consulting services for Oracle’s Hyperion suite of enterprise performance management products. Hyperion Solutions was acquired by Oracle in 2007, and Alui was founded in 2008 by previous directors of Oracle-Hyperion Solutions.Alui is an independent company and has clients in North America, the U.K. and Europe.
Alui does not provide global tax, regulatory and compliance (GTRC) services.
Alui provides value-added services as part of its standard support by assisting with updates and installations when clients perform these tasks in-house. Each client is assigned a support specialist who has consultancy expertise. Alui also provides assistance with making application changes as the client’s business changes. Alui offers “mini” consulting activities, carried out remotely in four-hour blocks.
Consulting and customized services provided by Alui include remote system administration, upgrades and reinstallations, provision of documentation and procedures, and remote and on-site consulting to perform defined projects.
Alui did not provide revenue amounts.
Company Website: www.origina.com
Headquarters: Dublin, Ireland
Fiscal Year End: 31 October
Number of Permanent Employees in Support Services: 110
Number of Current Customers: 117
Certifications to International Standards: ISO 27001, Cyber Essentials
Overview:Origina, founded in 2012, offers third-party technical support and consulting services for IBM Passport Advantage software products. Supported IBM product families include WebSphere, Db2, Informix, Domino, Netcool, Sterling, MQ, FileNet Content Manager, Cognos Analytics, Unica, Tivoli Monitoring and Rational. This includes support for former IBM Passport Advantage products such as those divested to HCL, Acoustic and SS&C Technologies Holdings.
Origina provides global 24/7 coverage and support using a team of 30 Level 1 resources in Dublin and Dallas, Texas. Origina pairs contractually binding service-level agreements with a service model that draws from a collection of over 600 Global IBM Experts, who are assigned on a per-product basis for the support term. Origina’s global IBM experts have a minimum of 15 years of experience with the product(s) they support.
Originadoes not provide GTRC services since these services are not required for IBM software. Origina’s offering extends the natural life cycle of IBM products through a support and maintenance program that includes value-added services in its standard support. This includes full support for all versions, entitlement capture, interoperability certification, new fixes, product enhancements, meet-the-experts free consultancy workshops, product upgrades, licensing assistance, and the ability to resolve defects and apply custom fixes. Origina also provides several additional services including, IBM Passport Advantage license analysis and consulting to leverage Origina’s Global IBM Expert team to help with complex, time-consuming projects.
Origina reported a total revenue of $59 million for 2018 to 2020.
Company Website: www.riministreet.com
Headquarters: Las Vegas, Nevada, U.S.
Fiscal Year End: 31 December
Number of Permanent Employees in Support Services: More than 1,500
Number of Current Customers: More than 2,550
Certifications to International Standards: ISO 27001:2013, ISO 9001:2015
Overview:Rimini Street, founded in 2005, offers third-party technical support, integrated application management and professional services for IBM, Microsoft, Oracle and SAP software. It offers technical support services for Oracle products including E-Business Suite, PeopleSoft, JD Edwards, Database, Fusion Middleware, Agile, Hyperion, Siebel CRM, Oracle Retail(former Retek products) and Oracle ATG Web Commerce. It provides technical support services for SAP products including Business Suite, S/4HANA, BusinessObjects, HANA database and the SAP database family, formerly known as Sybase. Rimini Street offers technical support services for IBM Db2 and Microsoft SQL Server, and also offers application management services for SAP and Oracle.
Rimini Street offers GTRC services as part of the standard support agreement at no additional charge. Rimini Street’s tax, legal and regulatory update process includes delivery through its proprietary and patent-pending tax engine. It currently provides these update services for 126 countries, with capabilities for nearly 200 countries. Rimini Street analysts gather, analyze and scope GTRC changes from over 5,300 government sites, 3,500 information sources and 26,000 jurisdictions.
Rimini Street clients are assigned a primary support engineer (PSE) and a team of experts for each product line for global workforce redundancy and resilience. PSEs average more than 21 years of experience. Rimini Streetprovides value-added services as part of its standard support by offering advisory services delivered by a dedicated team of experts in each area, at no additional cost. These services include security advisory, license advisory and cloud advisory, as well as integration, interoperability, proactive support services, and functional and technical roadmap services.
Professional and customized services and solutions provided by Rimini Street, for an additional charge, include application and database management services for SAP and Oracle, combined with vendor replacement third-party support for an integrated management and support offering. For SAP and Oracle, this includes operational support, system administration, system health monitoring and development support. Other offerings include advanced global security assessments and solutions, integration services and solutions, database health checks, proactive application monitoring tools and services, and interoperability services and solutions, including a patented browser interoperability solution.
Rimini Street reported a total revenue of $861 million for 2018 to 2020 ($253 million in 2018; $281 million in 2019; and $327 million in 2020).
Company Website: www.spinnakersupport.com
Headquarters: Greenwood Village, Colorado, U.S.
Fiscal Year End: 31 December
Number of Permanent Employees in Support Services: 394
Number of Current Customers: 984
Certifications to International Standards: ISO 27001:2013, ISO 9001:2015
Overview:Spinnaker Support, founded in 2008, offers technical support services for Oracle and SAP. For Oracle, it delivers third-party support for Database, Fusion Middleware, E-Business Suite, JD Edwards, Siebel CRM, Agile PLM, ATG Web Commerce, Endeca, Hyperion, Retail and select Oracle PeopleSoft modules. Spinnaker Support offers third-party support for SAP Business Suite and SAP Application, SAPDatabases and technology, SAP BI components, and Sybase database. It also offers managed services and consulting services for Oracle and SAP and third-party support and managed services for Microsoft SQL Server.
Spinnaker Support provides GTRC services, except for Oracle PeopleSoft payroll, at no additional charge. It offers a standardized, repeatable process for update services and delivers the changes tailored for the individual customer.
Spinnaker Support provides a full complement of value-added services in its standard support. This includes break/fix for standard and custom code and interoperability, security and vulnerability protection, license compliance assurance and audit defense, general inquiry for supported products, and technology advisory services, including interoperability planning, virtualization and cloud migration. In 2021, Spinnaker Support began offering its Ultimate Support Guarantee, a commitment to customers for the delivery of the above listed services.
Consulting and customized services provided by Spinnaker Support include SAP Basis and BI managed services, and application and technical services for the Oracle and SAP applications. These include application development support, system reconfiguration, staff augmentation, database managed services, JD Edwards EnterpriseOne’ Configurable Network Computing (CNC)managed services, performance monitoring and tuning. Spinnaker Support also offers lift-and-shift cloud consulting services, which include relocating Oracle and SAP to the public cloud, specifically to Amazon Web Services (AWS), and then supports those applications in the cloud.
Spinnaker Support reported a total revenue of $271 million for the three-year period of 2018 to 2020.
Company Website: www.supportrevolution.com
Headquarters: Berkshire, United Kingdom
Fiscal Year End: 31 May
Number of Permanent Employees in Support Services: 142
Number of Current Customers: 191
Certifications to International Standards: ISO 27001:2013, ISO 9001:2015, Cyber Essentials
Overview:Support Revolution, founded in 1998, offers software support services for Oracle and SAP products. This includes Oracle products such as Database (all versions), E-Business Suite, Hyperion, JD Edwards, PeopleSoft, Primavera, Siebel CRM, Fusion Middleware, Business Intelligence, and SAP products such as Business Suite, HANA database, Adaptive Server Enterprise (ASE;formerly SAP Sybase) and BusinessObjects.Support Revolution offers consulting and customized services for Oracle and SAP, including implementation, upgrade, managed services and hosting in Amazon, Microsoft and other clouds.
Support Revolution provides GTRC services within the standard service offering at no additional charge.
Support Revolution provides value-added services as part of its standard support by moving customers from existing on-premises or hosted service providers to Amazon Web Services (AWS), Microsoft Azure or other clouds. Once Support Revolution completes the process, it delivers the system to the client as part of a comprehensive outsourced managed service (SaaS). Support Revolution also offers a full range of implementation services and change management services, as well as advanced security services, for an additional charge. The security services are based on Trend Micro Deep Security.
Support Revolution engages closely with existing strategic system integration (SI) partners to streamline integration and fast-track the delivery of its services.
Support Revolution did not provide revenue amounts.
Company Website: www.uscloud.com
Headquarters: St. Louis, Missouri, U.S.
Fiscal Year End: 31 December
Number of Permanent Employees in Support Services: 127
Number of Current Customers: 498
Certifications to International Standards: ISO 27001
Overview:US Cloud was founded in 2017 and is a privately held company. It was a spinoff of the managed services group ofFpweb, which was founded in 1996. It is focused on replacing Microsoft support offerings at a lower cost to its clients. US Cloud offers an alternative to Microsoft’s Premier Support and Unified Support offerings and claims to do so at a 30% to 60% savings.
US Cloud does not offer GTRC services.
US Cloud provides 24/7 support by U.S.-based staff and is International Traffic in Arms Regulations (ITAR)/Defense Federal Acquisition Regulation Supplement (DFARS)-compliant. US Cloud supports all Microsoft technologies, issues of all severities, and all global time zones with Level 2, 3, and 4 engineers in-house. As part of its US Cloud Premier Support offering, US Cloud also provides access to its proprietary elite MSP network with more than 400 ultra-specialist, Microsoft-certified engineers in the U.S. It offers cross-platform support to Microsoft clients for Cisco, VMware, cloud, hybrid and on-premises. US Cloud promises a 15-minute or less initial response time for all tickets and is backed by financial SLAs. It has comprehensive Microsoft certifications and competencies.
US Cloud offers value-added services as part of its standard support by allowing break/fix hours to be used for proactive support and project work, including engagement of technology-specific dedicated support engineers. US Cloud’s proactive services catalog contains options for engineer-led engagements around system health checks, security assessments, proprietary diagnostic tools for Azure readiness, migration support, chalk-talks and others.
US Cloud did not provide revenue amounts.
Those looking to evaluate TPSS offerings and engage with these providers should take the following steps to identify the viability of third-party support as well as conduct a risk-benefit assessment:
Step 1. Use the five scenarios described in the Market Analysis section as a guide to determine whether TPSS is a viable alternative for your organization.
Step 2. Send RFPs to the TPSS providers referenced in this Market Guide to request their list of services and pricing to support the specific support requirements needed to fulfill your megavendor software portfolios.
Step 4. Request at least three relevant references (similar-size enterprise and environment) from the TPSS providers that you are considering, and contact them to discuss their experiences and satisfaction with the specific TPSS provider(s). Use Gartner’s Peer Connect service to identify other Gartner clients that have inquired about TPSS as an alternative to either one or all four megavendor software products.
For this research, Gartner conducted briefings with third-party software support providers and reviewed customer inquiries and interviews conducted with reference customers. These consistently reveal that the typical selling price for services that include software break/fix and scheduled regulatory updates is about 50% of what the software publisher is currently charging the customer for product maintenance and support services. This selling price may be discounted on some occasions.
This research is based on data gathered from research done by Gartner’s Secondary Research Services organization. Results showed that inquiries related to software support keywords for IBM, Microsoft, Oracle, and SAP have seen a sharp increase of more than 50% for the past 12-month period in relation to the previous 12 months.
This research is based on data gathered from research done by Gartner’s Secondary Research Services organization and collective research by Gartner analysts focused on this space, which includes research-related interactions with the Gartner end-user and vendor client community. The net new sales growth rate over the past five years was based on data gathered from providers not privately owned. The five-year compound annual growth rate (CAGR) remained steady at 30%.
The 2020 Gartner Sourcing, Procurement and Vendor Management Survey: Results presented are based on a Gartner study conducted to identify the greatest challenges SPVM leaders are facing today when negotiating with and managing technology vendors. This primary research has been conducted online September 2020 to October 2020 among 279 respondents in North America (n = 130), Western Europe (n = 84) and APAC (n = 65).
Qualifying organizations span various industries except agriculture, construction, nonprofit, real estate and services. Organizations were screened for having an annual revenue for fiscal-year 2019 to be greater than/equal to $250 million. Organizations were required to have a formal SPVM resource(s)/team.
Respondents were required to be from corporate leadership, line-of-business leadership or the SPVM functional area and be CIO, CPO/head of procurement, sourcing director/manager, procurement director/manager, vendor manager, supplier relationship manager, contract director/manager or procurement category manager. Respondents were required to have involvement in technology/SPVM resource(s)/team.
Quotas were applied for countries/regions, organization size and function.
The study was developed collaboratively by Gartner’s SPVM team and the Primary Research Team
Disclaimer: Results do not represent “global” findings or the market as a whole but reflect sentiment of the respondents and companies surveyed (see Figure 3).
Refer to Section 2.4.6 of the SAP Enterprise Support agreement, which states, “In the event Licensee terminates SAP Enterprise Support. Licensee’s use of SAP Solution Manager Enterprise Edition under SAP Enterprise Support shall cease.”
Passport Advantage Agreements, IBM — See Section 3.8, IBM Software Subscription and Support, which states “If Client elects to continue IBM Software Subscription and Support for an IBM Program at a designated Client Site, Client must maintain IBM Software Subscription and Support for all uses and installations of the IBM Program at that Site.
If Client requests to renew expiring IBM Software Subscription and Support at a lesser quantity of IBM Program uses and installations than the expiring quantity, Client must provide a report that verifies current IBM Program usage and installation, and may be required to provide other compliance verification information.”
The six vendors in this guide are the only vendors in the market that offer independent third-party software support for IBM, Microsoft, Oracle and SAP. An independent third-party software support provider is one that offers commercialized independent support with no relationship with the OEM/ISV. The provider is not an authorized channel partner. The provider has no relationship with the OEM/ISV and, as a result, cannot access intellectual property, software updates, firmware updates, security advisories, or obtain OEM/ISV Level 3 or backline support.
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