Reducing Software Maintenance Costs for Retailers

Don’t buy into vendor pressure. There’s plenty you can do to invest in digital innovation with your current IT systems.

Technology powers a large portion of what consumers know of the retail industry — from credit card swipes to QR codes to inventory management — to provide them with a seamless omnichannel experience.

“The old saying ‘innovate or die’ is very true in retail,” says Andy Nagalewski, Director of Supplier Management at Sainsbury’s. “Fundamentally, our strategy is around giving our customers the best possible experience in our store, and you can only do that through innovating.”

In fact, Gartner forecasts global IT retail sector spending to grow at a 6.9% compound annual growth rate that will reach an estimated $262.6 billion by 2027. However, retailers still struggle with the same budgetary issues and expectations every other industry does — how do you optimize current technology and foster innovation while also reducing costs?

Software support budget woes

In general, 90% of all IT budgets is devoted to keeping current technology operational. And in an industry like retail, where the latest innovations are routinely built on top of dependable, bullet-proof systems, the costs associated with software maintenance monopolize a majority of that 90%, growing more costly and complex with every new system implemented.

That leaves a mere 10% of the budget crucial digital transformation initiatives that fulfill rising customer expectations and can differentiate you from your competition.

Retail sector spending on cloud-based technologies dwarfs most other industries, including healthcare and finance. However, this willingness to integrate newer technologies does not replace the need to incorporate the reliable legacy software that is still a major part of the overall IT estate.

Large software vendors have a reputation for forcing companies into prescriptive cloud migration and upgrades they might not want or even need. This is especially true when software moves to end of support (EOS). EOS software no longer qualifies for support or security patches from the likes of IBM, HCL, and VMware unless the vendor makes an extended support plan available.

However, sometimes these options aren’t available. Even when they are, customers can expect to pay a surcharge of 30% or more and will only receive patches for the first year.

Not surprisingly, retailers can often mistakenly believe that signing a new multiyear Enterprise License Agreement (ELA), upgrading to a supported software version number, or paying a premium for Extended Support (if the product is offered) are the only ways to keep their software supported.

But that’s not true.

Software that is no longer supported by the vendor can still be maintained by independent software maintenance vendors. Your company can keep using its current version for as long as you’d like, even if the software is no longer supported by the enterprise software vendor.

In “Market Guide for Independent Third-Party Software Support for Megavendors,” Gartner found that “organizations look to third-party providers to increase flexibility in their software maintenance and support contracts, allowing them to opt out of new and future software versions and release upgrades if considered unnecessary and costly for the business.”

Optimizing Your Budget

Independent enterprise software maintenance is a proven option for organizations that are looking for a more innovative approach than traditional vendor support. It combines ultra-responsive service and flexibility with considerable cost savings — up to 50% annually versus OEM support and maintenance pricing.

While this substantial savings is what might initially appeal to retail organizations that move care of their IT estates to an independent provider, more companies that transition from vendor support are discovering the value of the enhanced and expanded service offerings that are bolstering the growth in the independent market.

With added benefits including services such as license and audit consultation, enhanced cybersecurity protection, and one-on-one workshops with global independent experts, independent software maintenance is moving away from the traditional break-fix model into more of a strategic partner role, someone who can help extended the life and value of IBM, HCL, and VMware software as well as support it.

Want to learn more?

Our e-book, “Future-Proof Retail IT: Navigating Enterprise Software Roadmap Complexities,” covers ways to reduce IT maintenance spending, protect your portfolio from software audits, and gain additional value from the software you rely on.

Looking for ways to find extra dollars for innovation in your IT budget? Download our e-book today.