The OnBase renewal maintenances invoices for most of our clients will be dropping over the next few weeks. Many of our clients will see a small increase in annual maintenance due to Hyland’s decision to schedule flat maintenance increases each year. Hyland is looking for a way to fund additional product development (something we all want) without having to either increase the overall maintenance rate or increasing the list price of a software module – both of which we have seen over the past 5-6 years. These methods of raising maintenance revenue impact certain clients disproportionality and are impossible to budget for. The new uptick will allow maintenance rates to increase without impacting the price of the underlying software.
Please see the following information from Hyland for more details and to answer some questions:
In response to feedback about the unpredictability and disproportionality of software list price increases, Hyland is implementing an annual 3% uptick to the annual maintenance of all eligible OnBase customers, effective September 30, 2017.
The first-impacted OnBase customers are those with 12/31/2017 maintenance expirations. The first annual increase will be reflected in the year-end pro forma maintenance renewals sent on or around the beginning of October, 2017.
What It Means:
Maintenance on initial OnBase orders, both net new and add-on, remains at 20% of the software list price. The illustration below presumes no additional purchases.
$500,000 List Software = $100,000 List Maintenance Year-One
Upon Year 2, the maintenance total would increase 3% to $103,000 ($100,000 x 1.03)
Upon Year 3, the maintenance total would increase another 3% to $106,090 ($103,000 x 1.03)
Upon Year 4, the maintenance total would increase another 3% to $109,272.70 ($106,090 x 1.03)
Any additional software purchases would begin at 20% maintenance and the annual maintenance would then be rolled into the annual maintenance increase of 3% per year.
The uptick is not a 3% adjustment to the maintenance rate. So Hyland is not saying that the rate is moving from 20%, up to 23%, to 26%, to 29%, etc. Such a rate change would constitute a much more substantial increase. Rather, it’s an additional 3% applied to the prior year’s full-year maintenance sum total.
This change does not “unbundle” the maintenance rate from increases in the price of a software module. If an OnBase software module increases in list price, there will be a corresponding increase in annual maintenance to reflect this.