Cost. The cost- Enterprise Agreement, in particular – has come under increased scrutiny during the recent economic stress. Both IT and Financial executives are questioning the value of their licensing and support dollars. This scrutiny is not lessening as businesses respond to the economic recovery and start to move forward with new applications and systems requiring new infrastructure and software. If anything, it may be increasing. Clients are – and should be – demanding greater understanding of their environments and the costs associated with achieving and maintaining a compliant license position.
Anticipation of increased deployments that were placed on-hold over the past 12 to 24 months. This especially involves software vendors, whose sales teams could be more aggressive, whose pricing models may become more complex, and whose audit teams may become more vigilant in detecting and pursuing potential non-compliance situations.
Software-as-a-Service and Platform-as-a-Service opportunities will see a rise in interest. In order to gain a strategic advantage on the competition, an organization may opt for such a service which can make a particular business application operational more quickly. The Azure cloud services operating system illustrates Microsoft’s entry into this market. We predict more services like this to take off as businesses change and become more mobile. Customers are looking for simply, quick to deployment and cost-effective solutions versus expensive and drawn-out implementations.
The good news is that Oracle finally launched a SaaS model for ISVs with monthly licensing. People can pay for what they use. My only comment is that Oracle needs to video tape in a better environment. I was distracted by all the items in the background.
Recently, I was catching up on my reading and came across CIO Magazine’s Thomas Wailgum hilarious First Annual Enterprise Software Awards spoof. A smackdown of the enterprise software vendors accepting awards for bad customer service, bad marketing and SaaS versus traditional software modults.
Read Wailgum’s satirical blog post. First Annual Enterprise Software Awards: Mediocrity, Meltdowns and More.
Last week, Microsoft received approval for a patent for technology to meter software use and access to specific computer hardware. Why would they want this? Microsoft wants to introduce a “metered pay as you go” licensing model.
The new model would include fees that would be charged again as a prepaid or billed account for software and services. We believe that Microsoft is moving in this direction for several reasons; one being that their traditional licensing model is in trouble, CIOs are smarter about licensing and upgrading than they ever have been and are going to cut costs wherever possible. Look at companies like Salesforce.com and even telcos like Time Warner and Verizon, they have loyal customers that pay on a monthly basis for services – Microsoft has its eye on this model moving forward, they want constant income and locked-in customers.
Introducing a metered model will also allow Microsoft to bring Software as a Service (SaaS) models to consumers by charging usage for such tasks as word processing and web browsing. Microsoft needs a model like this to make a bold move in a technology market where Google is becoming the dominant player. They are hoping this will be there saving grace for new revenue streams and domination for the company once again!
Offering the option for companies to pay for only what they use sounds like a good idea to me, paying for web browsing and word processing by use on the other hand scares me a little. We’ll see if companies and consumers are actually saving or if this is going to hugely increase expenses once this model is offered I guess…
Its seems that software licensing has been the hearts and minds of many as Forrester rolls out its reporter on application licensing and pricing and Microsoft launches a licensing quiz.
• Forrester points out is 29% of a company’s total IT budget will be spent on software-related costs in 2008 including on software maintenance fees – around 30% of the budget – according to Forrester’s “Software Licensing and Pricing” report. In the most recent “Trends 2008: Applications Licensing and Pricing” report by Forrester’s Ray Wang and Elisse Gaynor, Forrester believes future application innovation trends like service-oriented architecture (SOA) and software-as-a-service (SaaS) will be the impetus behind a shift in how firms view apps licensing and pricing and what they demand from apps providers. They warn “In the meantime, business process and applications professionals must arm their firms to mitigate licensing pain points.”
• Microsoft (NSDQ: MSFT) is holding a contest for its channel partners, challenging them to see how much they know about the complex world of software licensing agreements (SLA). The Microsoft Licensing Quiz (who would have thought?) gives a series of multiple choice questions. Do you dare to take the challenge?
In the News This Week
This week’s software licensing news has been dominated by the message that software licensing is just too complex:
• InfoWorld Report finds licensing dissatisfaction