Lawson: 'Flat out no to maintenance price reduction but'

At Lawson Software's CUE09 event, Dean Hagar, Lawson's Senior Vice President, Product Management said that despite the economic recession, the company "Flat out no" will not reduce the company's maintenance charges to its customers. You'd likely resist if it was likely to impact your close to $1 million compensation package.

Instead, the company has introduced a tiered set of maintenance charges: bronze, silver and gold. Each has different price components that depend upon what the individual customer wants in terms of support and value.

The rationale Hagar put out was that maintenance is an important and profitable part of its business and while software sales may be soft, the company needs to maintain a level of profitability to ensure investment in the solution set: "An unhealthy Lawson...could mean bye bye Lawson...that's not good for anyone," said Hagar.

The exchange, began following a Tweet via Jim Holincheck (see below image)

I asked the question whether Lawson could provide specific customer examples that address the value in maintenance, the answer to which was "No" though the company claims more than 100 customers have signed up for the new offering. There then followed a a succession of questions seeking to get a deeper insight into Lawson's strategy on this point. To Hagar's credit, he didn't duck any of them, instead insisting the company needs to remain healthy and right now that's coming from maintenance revenue. Hardly a surprise there.

Despite Lawson's hard nosed position, it is good to see that while the company will not negotiate on prices, it will listen to argument where there is genuine hardship. "Of course we will listen, we want to work with customers," said Hagar.

As the session ended, I sensed that my colleagues on the maintenance issue will have follow up. Watch for posts from Frank Scavo, Ray Wang and Vinnie Mirchandani. In the meantime, here's a link to the Cue09 Twitterstream, providing further insights into the discussion on this and related topics.