Software licenses for mobile users are a “grey area” legally, opening enterprises up to mounting costs unless a compromise with vendors is made, Forrester has warned.
Although software vendors have forecast that their spoils from maintenance support will grow, the reality is that companies are seeing diminishing maintenance budgets against increasing demands for technology to improve customer service. Therefore CIOs “must better align spending”, analyst Duncan Jones said at the Forrester Forum for Technology Management Leaders in London this week.
Increasing mobile users are blurring the definition of what constitutes a separate user license, as software vendors like Oracle and SAP attempt to capture revenue from businesses’ new mobile projects.
Jones said: “Companies like SAP, for example, will have gone to clients that have a mobile application developed in-house for sales or field workers. Those mobile applications integrate with the backend system, sending information about the next call they have to make or relevant customer information. SAP comes along and says ‘oh well you need to buy new user licenses as all those individuals are using SAP’ and the customer says ‘no they are not, they are using the mobile application we have developed.’
“Nobody wants to go to court over that, and it often comes down to negotiation and whoever has the most leverage.”
Striking up a deal over frequency of use is key, and enterprises should work to change user price based on role, he added.
Long-term customers have leverage
Jones admitted that relationships with larger-scale vendors like Microsoft, SAP and Oracle take years to build up trust and may be daunting for barterers. However, contrary to popular belief, Jones said, large vendors who appear to be a “whale in the distance” are merely “shoals of sardines”, and within the corporations there are brand representatives who are flexible when it comes to long-term customers.
Jones also highlighted the pitfall of software “cost escalators” CIOs are embarking upon.
He said: “Software providers are licensing by core or by RAM of memory - putting you at the bottom of a cost escalator, and data inflation is increasing. Unlike hardware vendors, the providers won't put any cap on what they charge. You buy millions of dollars worth of SAP Hana and you are committing your organisation to buying one hundred million dollars worth in three or four years’ time, which I don’t think people realise.”
To avoid the escalation, Jones advised avoiding the use of per core or per RAM metrics.
Unite, the largest trade union in the UK recently reclaimed an estimated £1 million in costs while migrating from Windows XP to Windows 7, after its not-for-profit licensing privileges were revoked by Microsoft.
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