Increasing third-party support predicted for “postmodern” ERP: Gartner

third-party support

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.

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