“Noughty” Software Licensing — Is The Obituary Premature?

My colleague Andrew Bartels just published this interesting take on SAP’s recent results:

Software License Revenues Roar Back In Q1 2010 -- And Why Licensed Software Will Co-Exist With SaaS Beyond 2010

Liz Herbert and I will be speaking on this theme at Forrester's IT Forum on May 27 in our session: "Noughty" Software Licensing — Is The Obituary Premature? Andrew is absolutely right. In addition to the points he raises, there are other reasons why perpetual licenses aren’t dead yet, such as the financial results they generate. The new models haven’t yet shown they can generate both high levels of re-investment in R&D and high profits for investors. Many SaaS providers have to spend a large share of their income on sales and marketing to retain existing customers and renew subscriptions. That leaves less money left over to fund innovation or fewer profits than their old-model rivals whose entrenched installed bases guarantee high maintenance renewal rates.

But perpetual license vendors mustn’t be complacent. The SaaS model may prove equally remunerative to the license-plus-maintenance alternative when the providers get bigger. Software buyers can encourage the established companies to learn from their SaaS competitors by insisting on some of that commercial model’s advantages in their own contracts, such as low up-front commitment and cost flexibility. 

Information Overload! Think Twice Before Flipping The Switch On Alert Management

Lately I’ve been really focused on process automation -- specifically, how software can help but also potentially cripple cycle times. When it comes to enterprise applications, my strong view is that event and alert management solutions are two of the most critical components to achieving success.

Services Procurement (aka Vendor Management Systems) are no exception to this rule and since we are currently in the process of writing a Forrester Wave™ evaluation on this topic, I thought I’d share a few thoughts on what companies should look for in the context of these tools. Let’s start with a snapshot of a recent interview I conducted with a VMS end-user . . .

This company’s main goal was to free up key staff by automating services procurement processes and managing by exception only. The company viewed the software’s event management and associated alerting capabilities as core to achieving this. So when they found a vendor reporting over 200 alerts “out of the box,” that was a big factor in why they chose the solution.

The implementation team diligently gathered the requirements and presented the wide range of alerts to the end-user community. Business line managers were initially very excited at the prospect of being alerted via email when key events took place. The implementation team ended up enabling nearly all of the 200+ alerts.

The result? On Day 1 of acceptance testing, each primary stakeholder on the project who had signed up to do quality assurance received over 100 alerts from the application -- some in their email inboxes, others only in the dashboard. Now, this was clearly a setback but not necessarily a shop stopper. The team regrouped and decided to change the alerting philosophy to really only highlight exceptions in the process. Unfortunately, this is where the project started to come off the rails . . .

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To Understand Innovation, Start By Tracking Innovation Stakeholders

In my recent report, “Contracting for Innovation With Service Providers,” I argue that many sourcing and vendor management professionals have difficulty contracting for innovation, because the term “innovation” itself is elusive and subject to interpretation.

In my research, I note that for sourcing professionals to effectively contract for innovation, they need to be able to understand the business objectives of a broad base of internal innovation stakeholders – and consider whether their service providers can align with these objectives.  In the report, I considered the needs of three primary stakeholders – IT, business, and executive-level stakeholders.

But there are far more innovation stakeholders. After writing that report, I decided to review all of Forrester’s inquiries related to innovation over the past year to see if I could identify other innovation stakeholders.  After a review of about 500 detailed client inquiries about innovation, I’ve compiled a list of categories I have seen.

This list of innovation interests is quite diverse (and this is just a preliminary summary!). But the exercise helps us see how innovation is interpreted differently by different parts of the organization.  With this information, we can identify unique innovation objectives and have a much more informed discussion about what innovation is and how it is generated (eventually leading us to conversations about specific topics like structures, metrics, and goals).  

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Contract Lifecycle Management -- Briefing Notes On Upside Software

I had an interesting briefing Monday with Ashif Mawji, the CEO of Upside Software, and Dan Townsend, VP of Sales and Marketing. Upside is primarily known as a Contract Lifecycle Management (CLM) software vendor but also offers RFx capabilities and some elements of Supplier Performance Management. Upside is built on .NET and is a Microsoft Gold Certified Partner who also boasts Microsoft as a customer.

I rarely blog about vendor briefings, but this one stood out for a couple of reasons. First, it was the kind of briefing that as an IT industry analyst I’ve really grown to appreciate -- no slides, good two-way dialogue and a concise but impactful product demo. And, it was that product demo that really got my attention.

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Is Your Company At Risk For Co-Employment Liability?

Over the last couple of months I’ve seen a real up-tick in inquiries from services procurement and vendor management teams asking about co-employment risk. This is partly due to concern that the U.S. government, in search of new sources of tax revenue, will double down its efforts to identify large companies who are potentially misclassifying workers.

The concerns have been exacerbated by software and consulting vendors over hyping co-employment risks as an avenue to sell vendor management systems and managed services. That’s not to say that software and services can’t help, but I do get the sense that the issue at hand may not necessarily merit the attention it gets in vendor teleconferences and white papers.  

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Avoid “Eruption Disruption” By Effectively Supporting Traveling Employees

Organizations of all sizes have a growing number of traveling employees, some or many of whom travel overseas. IT should learn from the recent Icelandic volcanic eruption which resulted in many airport shutdowns across northern and central Europe for several days. Hundreds of thousands of traveling iWorkers were stranded, unable to reach their travel destination or even return home. The fortunate ones were those who’d been

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How Are Leading Technology Service Providers Bringing Innovation To Clients?

Over the past few months, I had the opportunity to interview representatives from 10 leading technology service providers about how they help their clients innovate.  My recent research summarizing those interviews is available to Forrester clients on our website. For those interested in the high level points I raised, here are a few of the key findings:

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Spiff Or Rif - The Key To Effective Negotiation With Software Vendors

I haven’t been blogging or tweeting recently because I’ve been on an unprecedented two-week vacation, but didn’t want any potential burglars to know that. Now, thanks to Eykanmuckyourlifeup or whatever its called, that vacation has turned into an extended business trip states-side (see #ashtag). So I’m taking the opportunity to meet more clients on the smoke-free side of the pond, to help them with their software negotiations.

This is a busy time of year, particularly for Oracle and Microsoft deals in front of their financial year-ends of May 31st and June 30th respectively. One of software buyers’ frequently asked questions is, “what extra leverage does a vendor’s year-end really give us?”

The answer is in the title above. On the one hand, if your deal would give your sales rep a Spiff, an extra bonus for selling specific products, then he’ll be very keen to prevent your order slipping into next quarter, when the spiff may not be available. Even better, he’ll be desperate to close your transaction now if he needs it to make his annual target, to avoid becoming part of next quarter’s reduction in force (RIF) program.

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TCS Continues To Build Its Innovation Capabilities

During a recent set of interviews with IT service providers on how they help their client’s innovate, I had the opportunity to speak with K Ananth Krishnan, CTO at Tata Consultancy Services (TCS).  Ananth described to me what I consider to be one most progressive innovation programs I encountered during these interviews – it was consistent with TCS’s capabilities, holistic in scope, and has the potential to be a important part of the company’s long-term evolution.

A few key findings from my discussion with Ananth:

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