Time for enterprises to bag a software bargain

The economic slowdown has created a buyer's market for enterprise IT departments that have the money, according to users, consultants and industry observers.

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The economic slowdown has created a buyer's market for enterprise IT departments that have the money, according to users, consultants and industry observers.

"Now's the time to buy more licenses should you need them and if you have the cash to spare. Vendors remain anxious for new deals and new deals are far and few between," Forrester Research analyst Ray Wang wrote in a recent blog post .

Frank Scavo, of, consulting firm Strativa , said he is telling clients to negotiate a ceiling on how much software maintenance fees can go up on an annual basis.

That's the real key to holding down costs, Scavo said: "Economic conditions are causing organisations to delay buying decisions, so the major vendors are aggressively discounting to prospects that are willing to make a decision quickly.

“[But] the business model of the major vendors is increasingly focused on maintenance fees, which are a recurring revenue source year after year. Software licenses are just a door opener to the maintenance revenue, where vendors really make their money."

Mark Slaga, CTO and CIO for the Americas division of Dimension Data, the IT infrastructure services provider , said he expects to score a better deal than usual next year on the maintenance renewal for his Oracle ERP (enterprise resource planning) system.

Slaga is also anticipating a nearly 20 percent cost reduction on the renewal of a SaaS (software as a service) collaboration product, which he asked not be identified because the agreement isn't finalised.

Overall, however, Slaga's advantage in this market climate depends on the type of deal, he said. "If there was a new project, I would definitely believe I'm in the driver's seat. Renewal, not so much. I'll have more leverage, but it won't be drastic."

One midsize company, Serena Software, believes it can save money by switching over its systems to SaaS (software as a service)-based offerings, such as Gmail, said René Bonvanie, a senior vice president. The move also reflects the company's decision to begin selling its products, which include project portfolio management tools, on a SaaS basis.

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