You have a Contract Problem, not a Currency Problem
Over the last several years, there’s been a lot of discussion about currency costs in maintenance invoices.
There’s no doubt that many annuity and renewal invoices include above-market costs for currency (which we can confirm based on analyzing many millions of dollars of Q3 invoices), but this isn’t the problem – it’s a symptom.
The unfortunate reality for most IP owners is that the typical annuity and renewal contract allows the vendor substantial leeway to charge whatever they want for currency or agent fees.
Even worse, most contracts were signed years (or decades) ago and are filed away and forgotten. Most organizations don’t realize that they’ve given their vendor a blank check for currency and agent fees, and often don’t even know what to look for.
Changing maintenance vendors is a hassle, risky, and the last thing you probably want to do. Updating a contract with your existing vendor isn’t much easier, so you’re faced with several less-than-appealing choices – and you don’t even know if it’s worth it. So, what should you do?
Do this Exercise to see if it's Worth Worrying About
- Start with the basics and simply find your annuity or renewal contract.
- Check for language limiting currency and agent costs. If your contract allows your vendor to convert foreign currency “at their rates”, – that’s not good.
- If there’s no currency or agent language, or the language is weak, you’re almost certainly paying too much. How Much?
Total Maintenance Invoice Value | Potential Savings (low)* | Potential Savings (high)* |
500k | 35k | 50k |
1 Million | 70k | 100k |
5 Million | 350k | 500k |
- Estimate your likely savings using the above numbers – if they’re large enough, it’s probably worth discussing with your procurement team.
