As promised in a previous blog post: Which Software Licensing Policy Is The Unfairest Of Them All? , we've launched a survey to find out what sourcing and vendor management professionals think about some common software licensing policies.  This isn't about bashing powerful software companies, but about building a consensus behind a campaign to bring software licensing rules up to date - i.e. protection of innocent buyers, rather than regime change.  I've narrowed an initial list of 30 questionable policies down to this Foul Fifteen of candidates for the (un)coveted "Unfairest" award:

1.       Double charging for external users

2.       Prohibiting or overcharging for anonymous users

3.       Maintenance on shelfware

4.       Counting cores instead of processors

5.       Counting all processors in a server, even if partitioned

6.       Upfront license purchase only, not phased in line with project milestones

7.       Maintenance repricing

8.       Insisting on purchase of all licenses before implementation starts

9.       Product enhancements packaged as new SKU’s

10.   Licensing by deployment, even if unused

11.   Charging for use of modules that customers cannot control or track

12.   Retaining right to change licensing policies at any time

13.   Multiplexing – definition is unclear or too wide

Early next year I'm going to ask Sourcing & Vendor Management professionals to vote on which software companies' licensing policies they most resent as Unfair.  Fairness is a subjective quality, but it seems to me that some policies penalize customers for circumstances beyond their control that are unrelated to the value they are getting from the software. Others have serious consequences that may not have been apparent to the buyer when he agreed to the contract. Fair software pricing charges some companies more than others, but in a logical, transparent way that is related to value. Jim Hagemann Snabe (SAP's co-CEO) explained software pricing best practice extremely well in this recent interview with Computerweekly.com's Warwick Ashford:
http://www.computerweekly.com/Articles/2010/11/29/244248/QampA-SAP-co-CEO-Jim-Hagemann-Snabe-on-SAP-strategy.htm

"Q: What is SAP doing to meet user demand for greater clarity on licensing and pricing?"

I attend several software company customer events each year, and I always feel like the only atheist in a room full of religious zealots. However big or small the vendor, whether it consistently delivers competitive advantage or overcharges for mediocre software, the people who come to the events are usually fans — people whose careers depend on their employer continuing to invest in the product they know.

The SAP UK user conference today in Manchester was no different. So when Jim Hageman Snabe stood up to deliver his keynote, this wasn’t the toughest crowd he’s ever faced. Whatever their concerns about product strategies, support costs, court cases, etc., these people are desperate for him to do well, because otherwise they are out of a job.

Nonetheless, even heretics like me would have to admit that JHS delivered a great keynote. Even Ruby Wax, the Anglo-American comedienne compere was moved to say “you could sell anything.” Here are some of the things that particularly impressed me:

·         Likeability. From linking his speech to Ruby’s opening routine, to funny and pertinent family stories, JHS showed what sort of person he is. This is very different from his predecessors and competitors. When he says he wants SAP to be more customer-focused, it’s clear that he means it.

·         Clarity. JHS set out simply and effectively where he wants SAP to focus its development. He set out six themes: quality first, stabilize the core, reduce TCO, innovate without disruption, improve usability, give customers predictability. Then he explained succinctly how SAP is addressing each one, in parallel with its vision for in-memory computing, on demand availability, and mobile device usability. Even if you disagree with his vision, you’re in no doubt what it is.

©2008 Prism Art & Design Limited.[i]

Some of you may recognize the guy at the front as Fireman Sam, the eponymous "hero next door" of the BBC children’s program set in the fictional Welsh town of Pontypandy. What does he have to do with software licensing?

Yesterday I spoke about software licensing trends to a group of customers, prospects, and partners of licensing optimization vendor Flexera. One of my key messages was that software asset managers (SAMs) must move on from reactive firefighting via fire prevention (both of which I call "Fireman SAM") to a more proactive management of license needs (which I call "license optimization"). Fireman Sam uses traditional asset inventory and hard disk discovery tools to try to measure software usage, compare it with license entitlement, and rectify any shortfalls. Fireman Sam’s arch enemy is License Audit Bill.

In contrast, a more mature process adds analysis of what licenses you really need to the data on usage and ownership. This information enables software sourcing managers to cut expenditure on excess licenses and over-specified versions. For example, Flexera’s product for SAP enables customers to put users in the right categories, thereby minimizing the purchase of more expensive "full user" licenses.

Best Software License Management Considers Three Questions

Vendor managers in companies with Oracle applications may have heard a lot of talk about its next-generation applications over the last five years. Well, the news from Oracle’s customer event in San Francisco is that Fusion is almost here. Oracle is extensively demonstrating the product here at the event, early adopter customers are already in the implementation process, and Oracle intends to generally release it in the first quarter of next year.

http://www.oracle.com/us/corporate/press/173456

Oracle hasn’t announced final pricing yet, but Steve Miranda, SVP of Oracle Application Development, confirmed that customers on maintenance will get a 1:1 exchange when they swap the product they own now for the Fusion equivalent. That is good news, although to be fair, my Oracle contacts had indicated this, off the record, all along.

The packaging into SKUs will mimic that of the current product set, to make the swap easier. I.e., the price list for HR will look like the PeopleSoft price list, CRM like Siebel, and so on. That makes some sense, but I wish Oracle had taken the opportunity to simplify the pricing so that there are fewer SKUs. For instance, Siebel's price list is over 20 pages long, and there's no clear link between the the items in the price list and the functionality you want to use. As a result, some customers buy modules by mistake, while others fail to buy ones they really need. Hopefully Fusion will provide a clearer audit trail between functionality and SKU.