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There’s an old saying that a rising tide lifts all boats, meaning that improvements in the economy will generally help all participants. But as enterprise software vendors have been taking a hit on new sales during the current recession, many providers have become much more flexible about terms and conditions with software licensing and pricing, according to a new report published by Forrester Research.

In other words, an ebb tide is good news for enterprise software customers, at least in this scenario.

According to Ray Wang, a Forrester analyst who authored the report which examines the practices of a dozen enterprise software vendors including Microsoft Business Solutions, SAP and Oracle, it’s become a real buyer’s market out there. Even heavyweights such as SAP and Oracle, both of whom historically have been averse to offering contract and pricing concessions to enterprise customers, are bending to customer demands more than ever, says Wang.

For instance, both SAP and Oracle have been offering public and private rebates to enterprise software customers, says Wang, whose report covers enterprise software pricing and licensing trends from Q2 2008 to the present.

Many customers are being permitted to defer any maintenance payments until after any software they’ve purchased has been fully deployed -- even if that takes a year or more, says Wang. That’s certainly good news for a lot of CIOs who have privately complained about having to fork over thousands of dollars in maintenance payments for software their organizations hadn’t even begun using yet.

Vendors are also setting much more “palatable” entry-level price points on software licenses, says Wang. This includes offering functionality and features that can be paid for in more manageable bite-sized chunks and by bundling functionality to demonstrate more value to customers, he adds.

“Everything is being designed to ensure that it’s a much easier sales process,” says Wang.

The Software-as-a-Service (SaaS) model is having a bearing on pricing and licensing strategies, according to the report. With the SaaS model serving as a benchmark, customers now expect to be able to buy licenses when needed, reduce licenses during downturns ‘and unload shelfware maintenance fees that often result from aggressive vendor sales tactics,’ according to the report.

The tide turn will inevitably turn against enterprise software customers, at least to some degree, once there’s sustained economic growth and software publishers see greater demand for their wares. But at least for now it’s a favorable environment for buying new packages or adding modules.

Comments (2)

	1. 06-08-2009 20:02
	Given the availability of great talent that has been displaced from other organizations and the deals on deploying new hardware/software infrastructure, the downturn is a great time to build a business if you have the right model and opportunity to pursue. My company, ENTITLE DIRECT, offers discounted title insurance and closing services to consumers who are refinancing or purchasing a home; since our value proposition is strong during this downturn, we've been able to keep growing and investing during the ebb tide. Registered

Frederick B. Kauber

	2. 06-09-2009 00:01
	SAP also had terrible timing on its decision to eliminate its Standard Support offering, which would have increased maintenance fees from 17% to 22% for some customers. Unrest caused SAP to delay the implementation period of the fee increase, further demonstrating that customers are in the driver seat at least for now. Registered

Mel Duvall

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