It’s not uncommon for a buyer to spend years installing a new version of Oracle or SAP software. The process requires the purchase of an expensive, long-term license and a ton of computer hardware. Then you need a team of experts to make the components work together and another team of experts to configure and customize the system for every peculiarity of a company. Year after year, Oracle and SAP levy maintenance fees to keep these customized machines humming. Call it a “thanks for being our customer” tax. For years, software makers would offer discounts to customers if they bought long-term licenses for, say, 40,000 expected employees instead of the 20,000 current employees. “You spend $25 million instead of $20 million for what’s billed as this super, smoking deal that will give you room to grow,” Smoley says.
(Full Story: The Two Horsemen of the Enterprise Software Apocalypse – Businessweek)