Open source enterprise applications -- including SugarCRM, Compiere, xTuple, and OpenERP -- are moving into larger organizations, says Ned Lilly, CEO and president of xTuple, the open source ERP provider formerly known as OpenMFG. "We have more and more enterprise CIOs staring down an SAP or Oracle contract renewal, and asking themselves 'why not open source'?" Lilly explains. "Frankly, this is happening a little faster than we'd anticipated."

Perhaps, but for the time being, open source enterprise software appeals primarily to SMBs. "The greater the complexity, the less open source [enterprise applications] provide a viable solution for the enterprise," says Gerry Brown, senior analyst at Bloor Research. Indeed, proprietary or open, customers still need those tax, legal, and regulatory updates, and it's more cost-effective to sign an extensive support contract than to employ an army of experts.

Regardless of whether you're going open source, buying support for a packaged application from Oracle or SAP, or subscribing to SaaS, the trick, according to Tom Pacileo, executive consultant at Compass Consulting, is developing an upgrade road map and balancing the technology so that companies don't overbuy support and not actually need all of what they pay for.

That may be easier said than done. Rimini Street's CEO Ravin claims that up to 70 per cent of revenue from support and maintenance contracts actually goes toward software development, so customers wind paying in advance for programs that they may not want or may never get. Plus, companies need the latest versions of applications to take advantage of the most exciting new technology developments, such as SOA and virtualization.

"Businesses don't have the luxury of letting support run out," Yankee's DiDio says. "They get you one way or the other: Pay up front or cross your fingers and pray."