After working your way through Torey’s 2-part series, you have probably figured out that it’s a tough decision. It all comes down to ROI, which is a two part calculation. The first part is what does it cost to stay, and what does it cost to go:
This calculation requires filling out the following table at the very least and getting a good feel for total cost outlay either way:
|Annual Maintenance Cost||Usually % of License||Often Fixed Amount|
|Estimated LifeSpan||Annual Maintenance Cost * (Years-1)||Usually fixed amount, sometimes lower for longer lifespans|
|Required 3rd Party Software Upgrades||Extra Provider Costs||Extra Third Party Costs|
|Forced Provider Upgrades||Provider Costs||3rd Party Costs|
|Extra Training Costs||if not included||if not included|
|Extra Customization Costs||if not included||if not in base support|
If the third party cost is significantly less (at least 20%, preferably more, because there are always unknowns and gotchas and switching costs), then you consider switching. But only if there is also value.
Cost alone should not be a consideration. What sort of value will the new vendor bring with them? Will they bring best-in-class processes? Do they have any needed industry and category expertise? Do they consistently out-perform the vendor in areas of inefficiency in the organization? If they don’t also bring value, the savings will be limited compared to what is expected. But if they bring added value, then it’s a totally different story, and one that needs to be read.