Monday, December 22, 2008

Could 2009 be the Year of the Licensing Nazis?

I've seen some things a-rumbling in the world of software vendors recently.  How they're treating their enterprise customers has changed.  Not just my employer, but many others, from discussions I've had.  It seems there's an increased interest in pressuring customers to comply with licensing and even consent to audits.  I won't name vendors here, but they are names everyone is very familiar with.

With the economy in crap shape, companies are predictably being cautious, and tightening budgets.  Hiring freezes, delayed purchases, and cancelled or delayed projects, are all becoming common.  In a huge majority of cases, that translates into cancelled software purchases or upgrades.  Vendors are reeling from the forecasts of horrific revenue drops as well.  How they react is what I'm noticing.  Companies that used to take a "customer is king" approach are now starting to act in a more discerning or stern role.

What this could mean for a lot of customers is that if vendors even smell the slightest scent of improper licensing, they may forego the usual friendly chit-chat process to resolve things, and go for the on-site audit.  I wouldn't be at all surprised to see a significant increase in audits next year, assuming the economy continues to decline or stagnate as much as the pundits are predicting.

The courts have backed vendor audits in almost every instance they have been requested. This could bode well for groups like the BSA.  Some smaller vendors may see them as their new body guard against  the neighborhood bully called "piracy".  The penalties are severe and almost always works in favor of the vendors in terms of publicity, penalty fees and additional revenue from true-up licensing purchases.

Another thing that wouldn't surprise me is to see vendors begin pushing multi-year subscription contracts with early termination penalties.  Just like cell phone providers have done for years.  Some already do, but most are still focused on yearly contracts.  It makes sense from their perspective and it hedges their risks in an uncertain economy.  Rather than making two or three year contracts an option, they could become the standard.  Obviously, I could be wrong and I don't claim to have a crystal ball, so who knows.
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