Viewpoint

The Man Behind Our Software-Update Nightmare


Meir M. "Manny" Lehman did a bad thing. A very bad thing.

Oh sure, he may seem like a nice elderly gentleman. And he may seem all smart and accomplished, too. Over the course of his 50-year career, he's worked for IBM (IBM) and the Israeli Ministry of Defense. He was also the head of the computing department at London's Imperial College of Science and Technology and then a professor at Middlesex University.

But his research led to bad, bad things.

It all began in the 1960s, when Lehman predicted that changes in software were inevitable, and that they'd be brought on not by bugs or poor programming, but because of user requests for more features and functionality.

It's a good theory, but oh, the injustices it spawned! If only software users could count on regular updates that make the product more useful. Instead, Lehman's research has been used by software vendors to justify annual maintenance fees that do more to boost vendors' bottom lines than they do to improve products.

Curse you, Manny Lehman! May your children and grandchildren be stuck using Microsoft's (MSFT) Windows Vista for their lifetimes!

Institutionalized Costs Fast-forward forty-some years and we users are now forced to pay an additional 18% to 30% of our software costs toward an annual maintenance fee. Then we're expected to renew this contract each year. But software vendors don't admit that this annual charge is an extra revenue source that helps them fix software bugs that should have been addressed from the get-go. They tell us that without paying these fees we won't get new updates, versions (read: bug fixes), or technical support (read: help fixing problems in their product).

Most of my small business clients who use some of the most popular business software hardly ever go to their vendors for technical support. Typically, they need training, customization, and development—the kinds of services generally not included in most software maintenance contracts. And in the rare instance of a database meltdown (like in the case of an electrical outage or an infrastructure problem) these companies turn to their local partners or to free materials available on the Internet for support. Or they just restore a good copy of their database from backup.

Unless there's a significant bug that's fixed, many small business owners don't see the value in renewing their maintenance just to get new versions of their software. Often we see new products shoved out the door by software vendors anxious to prove that they're doing something to justify their maintenance fees. And these products contain little more than cosmetic changes or window dressing.

Some software vendors have abused your research, Mr. Lehman. They sneakily mislabel updates as "new products." This way they can keep charging customers for maintenance on an existing product. And if the customer wants to buy the "new" product they have to pay an extra fee. A despicable practice, but I've seen it happen.

In some cases, software vendors use maintenance fees to tighten the nooses around customers' necks. If these customers are not current on maintenance, the vendors say, they will not be able to purchase additional licenses. Many small businesses reluctantly give in to this scheme for fear that if they need to add users, their software vendor will levy excessive "reinstatement charges" before they're even allowed to purchase another license or two.

Entrepreneurs Fight Back Do you see the evil that your research has unleashed, Mr. Lehman? Luckily, small business owners are resourceful. Many have found ways to fight these maintenance fees.

For example, some of my clients who are certain they'll need more user licenses in the future just buy them at the outset. That way they can let their maintenance lapse in a year, but they've got their license numbers already in the system so they can add users. Other clients try to pick up black market licenses on the Internet. Some use other corporate names or entities to purchase new licenses and then just tack them onto their existing systems. I'm not saying I recommend any of these tactics, as some may feel they cross an ethical line. Then again, in the world where software vendors charge fees for nonexistent services, there's plenty of debate over exactly where that line is drawn.

Other business owners tend to be more wily in their negotiations. They let their maintenance lapse and then wait until the software vendors begin offering inevitable "we want you back" campaigns. These are as predictable as the bugs in their products. Vendors look at all their customers that haven't renewed their contracts, then come up with schemes to get them back in the fold without upsetting all of their other customers who, like two-thirds of my own clients, have been dutifully paying their annual fees. These schemes involve waiving reinstatement fees, offering discounts on new licenses when maintenance is renewed, and other little tricks to kick-start a new revenue stream.

Another way I've seen customers get a deal on maintenance is to let their current maintenance lapse, wait for a discount to be offered, and then offer to pay for more than one year of maintenance in advance. Vendors love a revenue stream, but they love cash in the bank even more. And to that end, business owners who have the means to pay for two or three years of their maintenance at once can negotiate significant discounts.

For such a respected academic, Mr. Lehman, your research has brought about bad, bad consequences. O.K., I take back the curse wishing your children and grandchildren will be stuck using Windows Vista. That was way too harsh. I know your theories about software evolution have little to do with how software companies take advantage of their customers. But it was because of your groundbreaking ideas that the practice of charging for software maintenance really took off. And for that I'll never forgive you, sir!
Gene_marks
Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service, and financial management tools to small and midsize businesses. Marks is the author of four best-selling small business books and writes the popular "Penny Pincher's Almanac" syndicated column. He frequently speaks to business groups on penny-pinching topics. More penny-pinching advice from Marks can be found at www.quickerbetterwiser.com.

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