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:
"Q: What is SAP doing to meet user demand for greater clarity on licensing and pricing?"
SAP customers shouldn't worry about the financial hit. SAP can pay the damages without having to rein back R&D. The pain may also stimulate it to greater competition with Oracle, both commercially and technologically, which will be beneficial for IT buyers.
Was the award fair? Well, IANAL, so I can't answer that. But my question is, if the basis of the award was "if you take something from someone and you use it, you have to pay", as the juror said, does that mean SAP gets to keep the licenses for which the court is forcing it to pay?
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.
No, I’m not wasting Forrester’s blog space for yet more coverage of the royal engagement. I think Ariba’s proposed acquisition of Quadrem, that it announced today, is much more interesting. http://ht.ly/3bPei
Forrester has been predicting, and advocating, consolidation in the procure-to-pay market for a while:
While I’m unqualified to comment on whose investors do better from the $150m purchase price for a company with about $50m revenue, I do believe the merger is good news for both sets of customers and suppliers. Firstly, Ariba reinforces its place as one of the four or five large supplier networks that will eventually dominate the market. Its customers now get access to a wider stable of suppliers. Quadrem originated as a marketplace for mining companies, so it is particularly strong in MRO categories and in natural-resource-rich regions such as Africa and Latin America where Ariba is under-represented.
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
Analysts suffer get the benefit of dozens of briefings per year from hopeful vendors trying to convince us that they are the next big thing. Here’s a typical example of marketing-speak messaging that is an amalgam of all the mistakes that will ensure a vendor goes on our "not with a barge pole" list.
“Exvezium is a leading provider of Purchasing and Supply Optimization (PSO) solutions, focused on the automotive, retail, financial services, and government sectors. Customers such as Mutt Publishing, Shania Entertainment, and the Steiner Wig Corporation have chosen Exvezium for its very unique requisition automation, online tendering and award optimization capabilities. Leading analyst firm Milometer classed Exvezium as a Strong Challenger in its Sourcery Square 2009 evaluation.
"The four best practices for implementing PSO are getting executive buy-in, choosing a configurable solution, supporting constraint-based awarding, and maximizing event activity," said CEO, President and Founder Mark Ettingbabble. "Exvezium supports these through our combination of cutting-edge technology and best-in-class services."
What’s wrong with this? Here are my dirty dozen analyst pet hates:
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.
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.
Marc Benioff, CEO of salesforce.com, gave a typically energetic performance at London’s Royal Festival Hall yesterday, both in the main-stage keynote and the private lunch for press and analysts. In addition to some humorous digs at Oracle, SAP, and pretty much any company that wants to run its own data center, Benioff described his vision for enterprise applications in the world of social computing, which he calls Cloud 2. Key to this vision is salesforce.com’s own Chatter application, which is . . . er, well actually it's not really clear what it is. Various spokespeople described it as an internal Facebook, a collaboration engine, Twitter but secure, but to me it still seems to be a user interface in search of an application.
The demonstration reminded me forcibly of the scene in Bruce Almighty in which Morgan Freeman lets Jim Carrey hear all the prayers being made at that instant by the citizens of Chicago. The user gets a stream of tweets, discussion threads, notifications, and alerts from feeder applications, messages from colleagues to each other, general questions, etc. My question, which no-one could answer adequately was “how is this different from email?” The features they cite — filtering, highlighting, threading, categorizing, etc. — are all in Outlook if you care to use them.
The main difference, apart from the fashionable user interface with the sender’s photo next to each message, is the switch from emailers deciding who they want to read their message, to readers deciding whose chats they want to see. Benioff’s description of his own Chatter feed puts him as the omniscient Bruce, watching every sales process, customer service problem resolution, product design collaboration, and invoice approval throughout his organization.
I’m in the process of buying a new car, and I’m trying to apply everything I’ve learned from my research into software negotiation towards getting a good deal. I’m noticing many of the irritating behaviors from the dealers’ sales staff that Forrester’s sourcing and vendor management clients encounter regularly from their software reps. Here is my list of the worst ones, but I’d love to hear other people’s suggestions:
We’ve all heard software reps blame “revenue recognition” and “Sarbanes-Oxley” as an excuse for not giving an extra discount or contractual concession. IT sourcing professionals may now hear “GSA Rules” and the “False Claims Act” cited as similar justification: “We didn’t give that concession to the government, so we can’t give it to you.” Could that be the worrying unintended consequence of the Justice Department’s action against Oracle: http:/searchoracle.techtarget.com/news/2240019712/US-government-sues-Oracle-for-tens-of-millions-of-dollars?
I can’t comment on the details of the Oracle case, but I’m sure it is complex and two-sided. For instance, I’ve helped clients negotiate reasonable compromises with Oracle to handle special circumstances that won’t apply to many other organizations. These may have involved an extra discretionary discount, if Oracle didn’t have a programmatic way to handle the exception. I wouldn’t expect to get the same concession or discount for another client to whom those special circumstances didn’t apply. For example, this report describes one issue that is particularly important to public sector agencies, but whose impact varies widely: Do Your Software Contracts Permit External Use?