Magazine Article | October 2, 2017

Software Support Financial Fundamentals

Source: Software Executive magazine

By Thomas J. Sweeny, principal and founder, ServiceXRG

Understanding margins, funding, and financial models of support.

Support has evolved from a tactical necessity to a strategic imperative for software companies. Support accounts for more than half of revenue for many companies with average margin performance of 67.8 percent and far higher for companies that have well-developed support programs and policies. To achieve these returns, companies spend between 2.5 and 15 percent of total revenue to fund support operations. This by itself is a reasonable return on the investment in support, yet it represents only a fraction of the full potential impact of a well-defined support strategy.