Negotiating annual increases with any software vendor, not
just ERP vendors, is essential and an art. There does need
to be a push-back from universities in these negotiations.
Here at our public university, with the bid process, I feel
that the public nature of the bidding at the start of the
project really limits our ability to negotiate successfully -
sort of like playing all of your cards up front. Still, I
think the time to do this is at the time of original
purchase. You can write your lowest expectations for annual
renewal into the RFP, and require vendors to put renewals
into their bids.
In the early '90s, we were much where you are now. We could
not get the vendor to drop the support costs. We wanted a
lower tier of support, because it was clear the vendor was
not investing in the product and was heading in a new
product / platform direction. We wanted that lower tier
tied to COL increases. We were unsuccessful at negotiating
the renewal we wanted, dropped all vendor support and moved
on to our own support model.
This lasted about 5 years. In the end, we simply could not
keep up with the federal mandates, particularly around
financial aid and employment regulations, no matter how many
people we put on the project. The licensing cost savings
could not meet the increased costs of maintenance,
particularly in heavy change FinAid years (which happened
the last 2 years of the 5 yers). The federal regs come out
with very tight deadlines, and meeting the regs in short
time frames became impossible. There was no left over
funding for technical innovation in this area, and we had a
year 2000 issue in our future. We went back to a new ERP
system by summer 1999.
Our push back now on licensing is to try to index to COL
(not that this is successful), and we are willing to trade
longer term agreements for lower annual percentage increases.
I'd also like to push that any product family change such
that a product moves from "Optional" to "Required" gets some
sort of reduced pricing and reduced renewal.
Our software costs, have seen double-digit inflation over
the last 5 years, for the more that 50 items on the list.
This is something that cannot continue, and for me, the best
option to threaten these vendors is "open source." It seems
the only way to introduce some sort of competition into the
And what I really, really want is a high-quality, open-
source, enterprise-ready database management system. My
experiences with the one DBMS that is in higher ed (for just
about any HE ERP) have been just dismal over the past year,
and nothing would make me happier than to see them go away.
The DBMS behind ERPs and CMS/LMS is a killer cost.
Assistant Vice President
University Technology Services
www.oakland.edu/uts - the latest news from University Technology Services
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