A Software Insiders Point of View

With a few days left in the year, it’s hard to believe that 2008 is almost over.  Just like our paltry .401K’s and lowered gas prices, it’s like we reverted to the Dot Com bust.  Extreme contrasts in positions and tremendous change made 2008 both exciting, suspenseful, and frankly sobering like 2002.  In fact, it [...]

Software Ownership Remains Unusual, Onerous, and Restrictive
Software licenses are truly unique.  Licensee’s can not resell, reuse, or share their licenses with others. For example, enterprises easily reuse, resell, or share tangible assets such as hardware, telecom equipment, and storage. From both a replacement and life-cycle perspective, leases for assets such as telecom equipment incorporate a [...]

Consumer Price Index clauses represent additional costs of ownership that should be avoided.  Maintenance typically represents 2 times the cost of the original license fees after 10 years of ownership.  Many customers have these CPI clauses in their contracts.  In the worst cases, customers may have signed CPI + X%.  CPI adjustments provide very [...]

So it’s that time of year for holiday cheer and pundits to tempt fate and pontificate.  Here are some very very draft predictions for 2009 in order of most likely to least likely to pan out:
End user predictions

Heavy discounting continues for new license. Discounts include non-monetary concessions such as training, implementation, integration, and other [...]

As competition intensifies for new license deals and users are under pressure to be cautious with new spending, all parties should expect increasing pressure for quality customer references.  Customers seeking references should focus on the following areas of relevance:

Industry - expect to get down to the micro vertical level
Market size - focus on [...]

Falling revenues, crumbling custom systems, and declining budgets often bring municipalities, state authorities, and related agencies together to gain efficiencies in vendor selection, purchasing power, implementation, maintenance, and support costs.  End users in the private sector seeking long term efficiencies may want to take a page from the public sector and consider shared services [...]

Margin Pressures Drive Maintenance Fee Increases
Announced at the 2008 Field Kick Off Meeting (FKOM), the elimination of the Standard and Premium support offerings was originally developed just for new customers. However, today’s announcement that existing customers will be “transitioned” to Enterprise Support as of January 1, 2009 will come as an unpleasant surprise [...]

Dollar Based Pricing Drives the Bulk of Recent US Based “Price Increase”
On June 16, 2008, Oracle updated its localized price lists and software investment guide. Applications previously priced at $3995 per user rose 13.1% to $4595 per user in US dollar terms. Database pricing increased 18.75% from $40,000 per CPU to $47,500 per CPU. Other [...]

Adding to the company’s support of PeopleSoft, JD Edwards, and Siebel third party, support, the move to support SAP comes at an optimum time for SAP users. Most users face SAP imposed deadlines for standard and extended maintenance support. To be specific, extended maintenance for R/3 4.6c users ends at the end [...]

Maintenance costs are the most expensive over the long termFocus negotiations on total cost not just license costs. Many enterprises enter into software contracts focused on license cost. However, the key driver of costs is really maintenance. At 17 to 25% of the license cost, enterprises end up buying up to 2x the original cost [...]