Following the recent economic downturn in the IT industry, software buyers now seek greater value for money in every IT investment. This change is pushing the balance of power towards customers and giving them the opportunity to obtain the flexibility and choice that they want from vendors and where possible, look for licensing models that relate more closely to their business strategy and performance. However, this can only be achieved if organisations have up-to-date information about software products and their use.
Software Asset Management solutions are key in providing such data, and in ensuring that organisations are compliant with their software licences. Butler Group believes that there is a fundamental shift occurring in the way that both supplier and customer organisations are approaching software licensing. Modern organisations are very particular about investment in IT, with each implementation requiring a business plan that delivers value for money.
As user organisations begin to regain the balance of power in licensing negotiations, pressure is falling on vendors to become flexible and provide a variety of software licensing options that will satisfy changing business needs.
User organisations must know exactly what is required from a desired piece of software if they are going to negotiate with vendors from a position of strength. In order for this to happen they need the most up-to-date information about their software products and their usage. Information is required that will allow organisations to ensure compliance with licence agreements, monitor and track software invoices and provide information for management and negotiation.
Software Asset Management (SAM) solutions are useful tools for managing such information. However, if organisations do not have a SAM solution then Butler Group believes that an immediate audit of the licences held and software used should be conducted.
Organisations should consider software licensing options that are tied to their business performance. These options include pay-per-use licences, term licences, shared ‘risk and reward’ methods, and hosted software services which more closely relate licensing costs to business revenues. Although Butler Group does not think that these licensing strategies will become the norm, the company does see them growing in popularity and major software vendors are stressing that they now offer customers flexibility and choice.
Organisations should evaluate the Open Source Software (OSS) market carefully as a lower cost alternative to software that is traditionally licensed. Although SCO’s aggressive actions are causing disruption and uncertainty in this market, Butler Group believes that OSS products are set to play an increasingly influential role.
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