Beware of Software Upgrade Insurance, Part 1

By Joe Auer

Beware of software upgrade insurance. There’s an emerging trend I must warn you about. Software companies are excluding new releases of the software you’ve bought from the maintenance and support fee you already pay. They’re adding fees, only they’re often calling them “upgrade insurance.” There’s no better way to say it: We should resist paying for upgrade insurance. By using the term “insurance,” those vendors want us to feel we’re covered for some unforeseen or unusual event. Nonsense. It’s just a way for the supplier to charge a new fee for a service that has always been included.Traditionally, software maintenance included bug fixes, help-desk support, enhancements and new releases (a.k.a. major enhancements). Although most basic maintenance programs still include the first three, the inclusion of new releases is now becoming an open question with upgrade insurance. Just to be clear, new releases are usually indicated by a change in the number to the left of the decimal, such as 3.5 to 4.0. Enhancements are usually noted by changes to the right of the decimal, such as 3.4 to 3.5, and are sometimes called point releases.

Regardless of the names, it’s important for us to insist that software maintenance and support include everything. To fully realize the benefits of standardized software packages, we must be kept current. Software that remains static undermines the fundamental reason for moving away from in-house custom development. After all, the supplier is joining us with other users to collect common requirements and spread costs. Maintenance and support fees were originally designed to do just that — provide dynamic software that evolves with changing business conditions.

So how do we counter the upgrade insurance racket? We should include maintenance and support as part of the licensing negotiations. That raises the deal’s value and also ties the deal’s completion to resolving all maintenance and support issues at the time of licensing. That way, the supplier risks losing the entire deal over just a maintenance issue. It’s easier to get vendors to concede that maintenance and support include everything, even new releases of the software, when we have bargaining power. If we fail to get that concession, we’ll in essence be relicensing the software with each new release.