Organisations are transitioning to a hybrid of on-premise and SaaS solutions, and IT budgets spent on on-premise solutions are shrinking. These are the findings of Gartner’s new report, ‘Does Third-Party Support Have a Role in Your Postmodern ERP Strategy?‘
In a wake-up call to ERP vendors, the report predicts that 10 per cent of enterprises will have cancelled their on-premise ERP vendor maintenance agreements entirely by 2020.
Following on the heels of Gartner’s 2016 CIO survey, which found that ERP remains a high priority for CIOs, ranking as their number four priority, Gartner’s latest report by analyst Pat Phelan delves deeper into the future role of third party support.
The report included a case study of an enterprise transitioning to a postmodern ERP strategy that called for a hybrid cloud/on-premise ERP architecture. It cancelled the vendor’s maintenance agreement and switched to a third-party provider, saving a full 50 per cent of its annual vendor maintenance fee.
The report provides key decision-making criteria along with recommendations to consider before switching to independent support. These include:
- How much of the on-premise ERP application is being retained,
- How much further development, rollout and upgrade activity is planned for the application, if any,
- How long the application will be retained,
- How important it is to keep the specific application upgraded,
- How satisfied the users and IT are with the vendor’s support services,
- How frequently the vendor’s support services are used,
- If/when the vendor will stop supporting/reduce support for the ERP application,
- Whether there are third-party vendors with a proven track record for supporting the vendor’s software, and
- How switching affects the ERP cost model
Gartner made specific reference to SAP as an example of a vendor that shrinks support as the application release ages, stating that customers on SAP’s customer-specific maintenance and support option do not receive tax and regulatory updates, but do receive some limited technology changes.
The full report can be downloaded here.