After three consecutive price hikes on support fees from J.D. Edwards (JDE) and then the buyout, Bill Means, IT...
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team leader at Milford, Ohio,-based Decorative Concepts Inc. (DCI) took a chance on third-party support for his company's JDE World applications.
The move paid off in flexibility and big savings. According to Means, DCI was looking at $280,000 per year in maintenance fees if he stuck with JDE/Oracle Corp., but with Cedaredge, Colo.-based Klee Associates Inc., he pays $24,000 per year.
Andy Klee, president of Klee Associates, said companies running JDE World that have no plans to upgrade software in the next three-to-five years have the potential for huge savings that can be applied to other IT priorities. But there's a catch. Dropping Oracle maintenance means that a customer is giving up the right to future upgrades and may have to pay back fees if the third-party relationship doesn't work out. According to internal documentation received by Search400.com, the back fee penalties are charged at 150% of the fees during the missed period.
"We try to make it very clear that it is not for clients who want to upgrade anytime soon, and those who are not in a position to freeze (stabilize) their environment," Klee said. "We also don't believe it is appropriate for clients using [JDE's] EnterpriseOne -- there are too many players in the middleware, and if a portion of the middleware needs to be upgraded, then we feel that exposes the client to too much risk to their ERP [enterprise resource planning] solution."
Means offered other caveats. "If you've got a pretty good staff you can do it, but you wouldn't go to [a third-party vendor] if you didn't," Means said. "It's not comparable to what you'd get from JDE. [A third-party vendor] isn't going to rewrite code if there's a problem.
But with smaller vendors and long-term investments, longevity is a concern. Means reinforces that there are other options. "There are other companies out there doing this. You could shift it over."
More JDE third-party support vendors include TomorrowNow Inc., recently acquired by SAP. Others include Nashua, N.H.,-based Versytec and San Jose, Calif.,-based netCustomer Inc.
Means has four programmers and three analysts running three business divisions out of his shop, each with around 250 employees. He considers his company the high end of a small business. He does wholesale distribution from China to the U.S. for home gardening products and artificial flowers. His JDE World runs on an iSeries and he plans to upgrade to a System i5 550 in June.
While Means is getting ready to upgrade hardware, a new software suite isn't on his plate at this time. "In the future we know we'll have to do something, but we're not looking yet. There's a lot of new stuff coming out, and we're going to let the business make the decision. Businesses don't upgrade just to upgrade anymore. There would have to be a new requirement that we just can't do."
According to Klee, the end goal for his customers is still evolving. "No particular pattern has emerged -- some are moving to more industry-specific, vertical, smaller ERP solutions. Some are moving to SAP, some are not sure where they are going and some may even approach Oracle as a 'new customer' after being off maintenance for several years."
Oracle did not return calls and emails for comment.
Let us know what you think about the story; e-mail: Matt Stansberry, News Editor