POBC - Maintenance Contract Renewal

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HendrixsWhiteSt...
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POBC - Maintenance Contract Renewal

Morning - bit off topic but interested in the view of IT bods/legals on here:

My company pays an annual maintenance contract for maintenance (software updates and hardware issues) of our various back-up units that we take out of the building as part of our disaster recovery plan. They back up the images/Vid files etc from our rendering equipment.

The cost is not insignificant and last year we decided not to renew in January as there were issues with the company withdrawing support for the specific OS we used. However the issue was resolved and in Sept I signed the renewal for 12 months cover.

I have now been informed that another premium is due this January for the next 12 months and after querying it have been told that the cover I bought in Sept was backdated to Jan 2020 so as there was no break in cover. I have never come across this before and seems like BS to me - taking car insurance as an example , if you renew part way through a year you pay a pro-ratad amount for the months you want cover, not backdated for the whole year ??!!

To the IT/Legal bods :

- Is this normal industry practice for IT maintenance contracts ?

- Is it legally robust?

With full recognition for the value of all contributions I am particularly keen on replies from people who actually know the position legally (re the second questions) rather than guesswork please folks.

 

Many thanks

 

 

HWS

Roy Blyth
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Hmmm, tricky one.  When you say you signed the renewal for twelve months in September, was that the original renewal contract dated from January?  In which case, it would seem you are liable for it.  If, however, they refused to provide support during the time you had not renewed, then they are on dodgy ground.  If it was a new contract, then I would say it runs from September.

If a maintenance contract is not renewed, but later the customer wants it reinstated, then I would be upfront with them and make it clear what the options are.  I have had customers not renew a support contract and then come back in 6-9 months time and just want to carry on as before.  What they didn't mention was they'd added all sorts of new software and hardware in the meantime!

From an 'IT Bod' with more years experience than I care to think about and with over £1million worth of IT contracts in place.

I hope that helps?

Even Sir Derek could win it!  Driving  

Steve Cragg
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What does the contract say? If it includes an effective date of January rather than September you have agreed to it.

aerobod
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It will depend on the contract, but many software companies will do this, Oracle is one that comes to mind where the principle is that to get the latest updates you need to have continuous support for the software, otherwise the alternative is to re-buy the software before opting for support again. This would apply to owned software, as opposed to subscription or cloud services (iPaaS or SaaS usage model).

Sometimes it is cheaper to let support lapse and stay on the old version (assuming security and availability risks have been mitigated) until it is no longer viable to use, then re-buy the software. The typical time period this will work for is 5 years, as standard software maintenance and support costs are normally in the range of 20 to 25% of the original capital cost.

James

rgrigsby
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Unfortunately this isn't uncommon, as has already been said numerous companies such as Oracle or Dell take this approach. They should have been clear with you at the point of signature though, normally it's called a "reinstatement fee" or something like that.

What seems a little unusual in this situation is that you say you let the contract lapse so they wouldn't have been providing the service, give it's a hardware/software maintenance agreement it would be reasonable to argue they shouldn't be charging you for a time when they weren't delivering the service.

Wrightpayne
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Were there any 'regular' activities that they didn't undertake in the lapsed period?

Back-ups are something that should be done very often - did these stop?

Ian

HendrixsWhiteSt...
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Evening all

Thanks to everyone who posted, much appreciated.

Having made enquiries it would seems that it's a common (if rather dubious) practice and if you let cover lapse, for whatever reason, it is automatically backdated to when the cover lapsed (even though you had no cover - nor had paid for any - in the intervening period AND you pay a penalty for non-renewal at the correct time. What's particularly galling is that the reason we didn't renew in the first place is that we were told our O/S wasn't being supported ....so why would we renew for a product we couldn't use ?

I have put that argument forward but unfortunately it's very much a case of 'take it or leave it' and so I'm weighing up the pros and cons including just ditching their kit altogether and starting afresh elsewhere. Leaves a very bitter taste.

Anyway - thanks again for posting.

 

 

 

 

'scuse me while I kiss the sky