MAINTENANCE AND PREMIUM SUPPORT PLANS.

There's a bewildering lack of consistency among fee-based maintenance and premium plans that target corporate and enterprise accounts. For example, some corporate plans offer unlimited phone support for all users at a company or site, while other plans limit access to a few help-desk staffers. Likewise, some software companies offer a total package of services that includes on-site  service visits, end-user training, free upgrades, and several publications and collateral items; other vendors provide nothing but the most bare-bones e-mail or phone support.

The pricing of these programs can be equally hard to compare. Many prices are based on a percentage of the software purchase price, others on the number of users or licenses, still others on a flat fee schedule, perhaps with extra pricing tiers for 'platinum' or 'gold' customers. Almost certainly, this lack of consistency leaves customers confused and reduces the value of service quality as a source of competitive difference.

Nevertheless, there are some trends that emerge when we analyze the survey data from companies with corporate programs:

* Maintenance pricing: By far the most common pricing model for corporate plans is an annual 'maintenance' fee based on the purchase price of the software (or the list price, if the software is heavily discounted). A traditional rule of thumb says that maintenance should be priced at 15% of the cost of the software; however, our data suggests that the actual industry standard is closer to 17%. The survey data also shows that the price of the software itself has a major impact on maintenance prices:

 Software Price Range           Maintenance   50% Range*   $10,000+
         (44 responses)   18%   15%-20% $1,000-$9,995                 (30
responses)   15%   15%-19% $15-$999                      (19 responses)   20%
15%-20% All                           (101 responses)   17%   15%-20%

* '50% range' represents the middle half of all responses.

* Purchase and renewal rates: With many enterprise products, customers are required to buy maintenance during the first year of ownership; thereafter, maintenance is usually optional. Again, product price is a significant variable in the purchase rate of maintenance plans: Only 20% (median) of corporate customers buy maintenance for low-priced desktop applications, compared to 95% for the most expensive applications. Once a customer has purchased maintenance, however, renewal rates tend to cluster in the 70%-95% range regardless of product price:

 Software Price Range                    Purchase Rate*   Renewal Rate*
$10,000+               (61 responses)   95% (80%-100%)   90% (85%-98%)
$1,000-$9,995          (56 responses)   80% (20%-100%)   80% (65%-95%) $15-$999
              (41 responses)   20% (10%-40%)   75% (45%-80%) All (170
responses)    (83% (25%-100%)   85% (70%-95%)

* 50% range in parentheses. '50% range' represents the middle half of all responses.

* Telephone support: Even though software vendors are concerned about the escalating burden of phone support, a solid 80% of our survey respondents still provide direct phone support 'for all users,' compared to 20% who limit their phone support to an internal help-desk group. This trend may reflect pressure from corporate customers who are trying to lower their own help desk costs, or it may be a sign that internal help desks don't resolve enough calls to justify the vendor's investment in training.

* Electronic support: It's fascinating to see how quickly e-mail and the Web have come to dominate corporate support programs. E-mail support is now offered by 157 of our survey respondents (compared to 130 who offer direct phone support), while 92 of our respondents now offer access to a 'restricted Web support site' as part of their corporate programs. Since both e-mail and Web support significantly lower the cost of delivering support services, the widespread adoption of electronic support is bound to make maintenance and premium contracts more profitable.

* Rapid response: With few exceptions (16 respondents), software companies seem extremely reluctant to promise on-site service as part of a comprehensive maintenance plan. However, a much larger number of companies (67 respondents) will commit to a 'guaranteed response time' for their maintenance customers. (Some survey respondents note that they'll send field service technicians to a customer location but charge extra for this service.)

* Collateral materials: Print publications are still the most popular way to deliver support tips, product news, and other information; 79 respondents say they provide a company newsletter or magazine to their maintenance customers, compared to 31 who say they send out CD-ROMs. Only 33 companies report that they offer training materials as part of their maintenance plans, an unexpectedly low percentage in view of the proliferation of on-site and public training classes (see below).

* Maintenance releases and upgrades: Almost all publishers include free bug fixes, minor feature upgrades, and other routine product enhancements as part of their maintenance plans. However, there is less consensus about whether maintenance customers should automatically get major version upgrades. Among our survey respondents, 109 include version upgrades as part of ongoing maintenance, while 54 others require their customers to pay for upgrades separately (sometimes at a discounted rate). Ironically, the more generous policy seems to yield a larger payoff: Companies that include full upgrade rights in their contracts sell more maintenance contracts, achieve higher prices and higher renewal rates, and generate a greater percentage of total revenues from all fee- based services:

 Maintenance   Upgrades    Performance metrics              releases only
included         Customers who purchase maintenance      60%   90%    Customers
who renew maintenance      80%   90%    Maintenance price (% of product sale)
15%   17.5%    Service revenue contribution              13%   20%