Treasury cuts software maintenance fees

Agencies and businesses that find they are paying more each year for software maintenance are starting to say, "Wait a minute." But the Treasury Department has gone a step further by insisting on a deal that lowers its software maintenance expenses.

By signing an enterprise agreement that provides licenses for all Treasury employees, the department was able to cut a deal with Vignette Corp. to lower the agency's annual software maintenance charges. These charges typically are a certain percent of the price of the original software license agreement.

Software companies count on annual payments for what they call software maintenance to help sustain their businesses between new software license sales. "Our maintenance dollars have shrunk with this deal with Treasury," said Dick Martin, vice president and general manager of public-sector business for Vignette, which makes Web content management and portal software.

Neither Treasury nor Vignette officials disclosed further details or the actual dollar amount of the agreement. But Treasury's chief information officer, Drew Ladner, said the Vignette contract represents the type of licensing deal the department intends to make with other software vendors.

"What's distinctive about this agreement is that we succeeded in reducing an existing and increasing maintenance stream," said Ladner, referring to a previous software maintenance contract that Vignette had with the Internal Revenue Service.

Treasury officials effectively negotiated lower maintenance fees and reallocated the savings to pay for extending the IRS contract into a departmentwide licensing agreement.

"Treasury is very focused on trying to reallocate maintenance payment streams to more productive uses," Ladner said.

Treasury is not the first organization to balk at rising prices for software maintenance, Ladner said. "Corporate customers are saying enough on maintenance payments."

Despite taking a cut on maintenance fees, Vignette still benefited from the deal overall, Martin said. "If the government wants to consolidate its buys into a large procurement like this, then that's good for both of us."

Ladner said the unlimited number of licenses will find good uses within Treasury. "We've got hundreds of portal and content management requirements across the department," he said.