Tech Watch | InfoWorld Staff » Report finds licensing dissatisfaction

January 30, 2008 | Comments: (0)

Report finds licensing dissatisfaction

TAGS: Applications

In an independent report, Forrester Research has found that software licensing and pricing continue to be "marred by complexity, soaring maintenance costs and a lack of flexibility and alignment with business goals."

The company's "Trends 2008: Applications Licensing and Pricing" report featured interviews with 25 clients of leading enterprise applications providers and surveys of 215 business process and applications professionals, queried about software licensing and pricing experiences.

Forrester, which published the report last week, believes trends such as SOA and SaaS will provide the impetus behind a shift in how firms view application licensing and pricing and what they demand from application providers. But in the meantime, business process and application professionals must "arm their firms to mitigate licensing pain points," Forrester said. Some have concluded, however, that licensing and pricing complexity is a necessary evil to fight misuse and accommodate heterogeneity.

Among the study's findings were that licensing remains too complex and often has a lack of clarity regarding the value customers were receiving. Some firms reported paying 26 percent of total cost of ownership on maintenance. Some clients said they paid for maintenance but never used the services.

Users interviewed also were dissatisfied with the inability of vendors to accommodate specific business needs. Mergers and acquisitions, meanwhile, create "a hodgepodge of licensing and pricing models," Forrester said.

The study also found issues with existing customers being treated like "second class citizens" while new customers get significant discounts. Vendor lock-in was another concern.

On the positive side, some vendors have embraced what Forrester called its "licensee's bill of rights." Vendors have worked to shorten sales cycles by assigning dedicated relationship-building account managers. Discounts for loyalty, large account values and early adopter status also are being awarded. Meanwhile, some mid-market vendors tailor service and licensing to clients' specific needs.

Oracle was cited as offering a flexible custom bundle allowing access to all products in a suite and to reapply pricing based on user increases.

Interviewees with the most positive feedback about application providers were early adopters and/or active in user groups, with vendors facilitating open forums for user groups.

SaaS, meanwhile, will force customers to think about cost per-user per-month while SOA will drive customers to consider business process pricing, Forrester said. Customers, meanwhile, will demand third-party alternatives to vendor-controlled maintenance.

Forrester recommendations included educating an organization before contracting with an application provider, insisting on openness and negotiation and considering total costs on a 10-year basis.

Posted by Paul Krill on January 30, 2008 02:08 PM

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