Cloud Reality Check: Big software companies have duped customers for decades
By Tarry Singh at 5 November, 2009, 8:08 am
Very interesting series of thought by this CEO at Ingress
Read on:
If you’re ready to embrace change and begin looking at more cost efficient and innovative ways to run your IT infrastructure, here are five tips to help you extract yourself from expensive Big Software contracts that are holding your company hostage:
1. Introduce real competition to the software license cartel. We know that introducing real competition for any product or service is the key to avoiding expensive and inflexible contracts. The key in software is to introduce competition from companies with a disruptive and competitive business model. Consolidation in the proprietary software industry has created an oligopoly of proprietary players which demonstrate their power by raising prices in the middle of a recession. In fact, the software leviathans such as IBM, Microsoft and Oracle compete with each other about as vigorously as OPEC members and we need new business models to provide real competition.
The proven alternatives are Open Source software from companies such as Ingres and Red Hat (RHT) and Software-as-a-Service (SaaS) offerings from players like Salesforce.com (CRM). Both models provide low and variable costs and create real competition to the proprietary software model. By adopting these models for at least 10-15% of your software you can negotiate better prices on the other 85%.
2. Understand and adopt the new software business models.. Open Source software has no license fee and support is provided under an annual software subscription that is substantially less than the annual maintenance fee charged in the proprietary model. The subscription includes product usage rights, support services, access to new features and goes up or down year to year depending on your actual business usage. This subscription model is used by both Open Source and SaaS providers and aligns costs directly with the value the software provides in actual use. Another benefit: the end of Big Software shelfware. Consider donating your remaining unused software to not-for-profit organizations that could surely use it.
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