Its possible to minimize maintenance costs through intelligent planning and execution, but its also possible. Standard percentage rate for annual software maintenance. To calculate the maintenance capital expenditures for 2009 you do 25. Initial hardware as a percentage of software cost 33% to 50% ongoing hardware maintenance 20% of the initial hardware cost initial design, build, implementation of services. Some of those companies will have it departments that play an important role in the business while for others the it department.
What percent are you using for maintenance, vacancy, pm. To get an overall picture of the ideal profit margin, youll first need to know how to crunch the numbers. Development cost versus maintenance cost stack overflow. Software maintenance fees may not be invulnerable to change. The time spent fixing bugs in software should be frontloaded to the first 612 months of release, however as time approaches infinity, the time spent on maintenance versus the time spent on initial. Every supplier has a different way of calculating maintenance and different competitive rates, but for the most part maintenance ranges from 2025% of net license fees.
Planned maintenance percentage is a valuable metric for tracking the health of a preventive maintenance program and identifying opportunities to reduce reactive maintenance. Depending on your business model, you may need to discount the license cost deeply, but can still get the list price for. It might not sound like much, but run the numbers out three or four years and see the impact. Organizations that are committed to measuring the effectiveness of their. Sap raises software maintenance fees for new customers cio. What are the typical maintenance fees as a percentage of.
Software maintenance costs will typically form 75% of tco. Accurately estimate your software maintenance costs galorath. How to cut software maintenance and support costs and. The rise in success is the result of the many changes in modern it. What remains, in my mind, is the cost of software maintenance and supporting. What are typical maintenance fees as a percentage of upfront license costs for enterprise software. Your operating expense ratio is your operating expenses divided by your revenue. Negotitate the maintenance increase percentage such that it is based on an economic indicator. Key maintenance management statistics for maintenance. There is a lot of new construction in my areas, so maintenance, in theory should be lower.
The popular benchmarking metric of costerv is a valuable tool for setting longterm goals when used correctly in conjunction with targets for plant reliability. Planned maintenance percentage pmp maintenance ratio. The more complex the software, the more maintenance it will likely need to ensure continued use. The maintenance fee is the sacred cash cow for enterprise software vendors.
Support may include telephone assistance time as well. The software maintenance cost is driven by a percentage of the initial software license fee which is usually between 1625 % of the license cost per year. A few years ago, 1518% of the software license fee was a typical benchmark. If we split that range down the middle to arrive at 2. According to a plant maintenance study from 2016, 51% of manufacturing facilities now use a computerized maintenance management system. Organizations with bestinclass maintenance will have a pmp of 85 % or higher. This means your cost for recurring maintenance will be equal to 2025% of the upfront software fees you paid for after any discounts that were a. The industry norm for software maintenance is about 15 to 20 percent of the original development costs.
The software maintenance cost is driven by a percentage of the initial. Maintenance contracts and costs also make up a huge percentage of many it budgets and the costs continue to increase year after year after year. A vendors maintenance and support fee on each software license, usually 20 percent to 25 percent of the net license. Key metrics of it intensity, including users as a percentage of employees, pcs per user, percentage of users with tablets, percentage of users with smartphones, users per network site, percentage of. Which factors affect software projects maintenance cost more. Maintenance fees as a percent of the license cost are not cast in stone.
How to cut software maintenance and support costs and fund it. Smrp maintenance cost as a percentage of replacement of asset value rav source. According to the plant engineering 2017 maintenance study, which was one of our main sources for this infographic, the average time spent on scheduled maintenance is 19 hours per week. Not very long ago, the typical software maintenance fee was 15 to 18 percent of license fees. To calculate planned maintenance percentage, start by dividing the number of planned maintenance hours by the number of total maintenance hours in the same period. Sap raises software maintenance fees for new customers. Accurately estimating software maintenance costs is critical to proper project management, as software maintenance makes up roughly 75% of. Forresters wang notes that the typical maintenance and support cycle has a big. This contract is usually calculated as an annual fee based on some percentage of the total software cost. For example, microsoft charges 16 % for maintenance, but hotline support is extra. The average percentage of projects deemed failed by the pmi research in 2017 was 14% as indicated on the chart above. Some charge 10 16% but that is commonly maintenance only.
Glass, an article in ieee software mayjune 2001, he talks about softwares 6060 rule, that is that maintenance. The average cost of operating expenses for a business as a. For example, microsoft charges 16% for maintenance, but hotline support is extra. It generally provides for overall support and maintenance. Not very long ago, the typical software maintenance fee was 15 to. Postdelivery maintenance in modern software development. An annual charge of 20% of the license fee list price is a good staring place. Updating software, adding new functions, fixing bugs and solving problems. Software maintenance cost is derived from the changes made to software after it has been delivered to the end user. Software does not wear out but it will become less useful as it gets older, plus there will always be issues within the software itself.
Preventive maintenance is the most desired cmms feature, followed by asset management and work order management. Indeed, for a typical licensed software application, software maintenance fees should be 20% for the first five years of the products life, 15% for. Heres what the average american spends to maintain a home. Society for maintenance and reliability professionals smrp best practice metrics, 3rd edition. Average cost of service and economies of scale the saas cfo. Schedule compliance is a maintenance metric that measures the percentage of time that scheduled work orders are completed. Accurately estimate your software maintenance costs. Technology vendors often sell a maintenance contract with their software. What are the typical maintenance fees as a percentage of hardware costs for enterprise servers.
The software maintenance cost is driven by a percentage of the initial software license fee. Even in little rock, arkansas, and baton rouge, louisiana, where the most. High software maintenance fees and what to do about them. According to accentures report, how software maintenance fees. If you look at effort expended on a project across its entire lifetime, then the average percentage of the total effort spent on maintenance is 6080%. That equates to a price increase of 25% not factoring in the cost of money, of course. Fl houses are mostly cbs and shingle roof on concrete slabs.
Manjit singh, cio of chiquita brands, says hes been watching maintenance fees for the software vendors he uses creep up from an average of. I work with 5 software companies 3 play in the municipal market space, 1 in gis and 1 in works management. A big chunk of the 72 percent goes to maintenance and support and that reality isnt expected to change anytime soon. Maintenance cost as a % of replacement of asset value. Software maintenance pricing fair or out of control. Development of software maintenance costs as percentage of total cost floris and harald, 2010 in another study, the relative costs of maintenance and software development.
Planned maintenance can also be broken down into several types. It spending and staffing benchmarks 20192020it budget. What are typical maintenance fees as a percentage of upfront. Most complete erp solutions are around 20 % which includes maintenance and hotline support.
Software maintenance is the annual cost that you pay for upgrades and support of the software. The consumer price index for urban wage earners and clerical workers cpiw increased 0. Some charge 10 16 % but that is commonly maintenance only. The top maintenance statistics you should know for 2017. Ask for maintenance fees to be based on the discounted price of.
Also some force you to pay maintenance every year or you lose the software. A vendors maintenance and support fee on each software license, usually 20. In frequently forgotten fundamental facts about software engineering by robert l. Software pricing considerations software maintenance. This contract is usually calculated as an annual fee. This varies and is a bit of a loaded question because every software product is different.
Businesses, on average, spend 80% of their time reacting to. First, they are increasing maintenance fees directly. Any business can save 1218% by investing in preventive instead of reactive maintenance. Maintaining an app is critical to its overall success. In order to remain in a healthy environment servers will need to go through maintenance, as its also a way to avoid drastic.