Enter Some Possible Software Pricing Thought Leaders
In the past customers have been disadvantaged in software contracts, facing numerous and expensive "fine print" clauses limiting their warranties. (See Is There a Panacea for Enterprise Software Pricing Yet?) However, in the new market, power is shifting from the vendor to the customer, and software negotiations are changing. Much to the delight of customers, some vendors are now differentiating their business strategy to accommodate administrative business needs and requirements. (See If Software Is A Commodity...Then What? and If Software Is A Commodity—Can You Still Win Some Competitive Advantage?.
Part three of the Is There a Panacea for Enterprise Software Pricing, Yet? series.
Vendors that are disadvantages because of their size, market clout, or brand recognition may want to differentiate themselves by designing and implementing a license agreement that incorporates the customer's priorities first. Rather than offering a traditional vendor-centric license that changes throughout the contract life cycle, at the customer's expense, this a kind of "all encompassing-license" captures most (if not all) of the customer's needs.
One stellar example is HarrisData (www.harrisdata.com), a privately-held Brookfield, Wisconsin-based (US) provider of integrated enterprise applications for medium discrete manufacturing enterprises in North America. The vendor has chosen a new methodology to administer its software by creating the Omni License approach. Customers obtain five years of maintenance and support, source code, upgrade and transfer capabilities, an unlimited number of users in a ninety-nine year perpetual license that is owned by the customer. This complete package ensures no unpleasant surprises for the user business and determines the total cost of ownership (TCO) up front. Moreover, the costs associated with the Omni License are generally the same, and in some cases, even less than the cost of a one year license from many of its competitors.
Because pricing information is given up front, this mid-market manufacturing vendor's approach has intrigued us. Payments are either in one lump sum, or in installments and covers virtually everything one could think of, including software, consulting, installation, service, upgrades, etc., for all available modules and for any number of users—without hidden surprises or contract clauses. After five years, if the user enterprise wants an ongoing service and maintenance contract, it will be available annually at a competitive price. The current cost is based on 10 percent of what the price of Omni License software was per year (which is still far less that the industry average). Like buying a car or furniture on credit, the vendor simply considers the transaction as completed after five years.
This is Part Three of a three-part note. Part One presented a problem analysis. Part Two discussed ERP Software service and maintenance alternatives.
Software Customer's Bill of Rights
Long and painful negotiations may provide some protection for customers, but today's software licenses still fundamentally protect the vendor's rights, and offer little protection of the customer's rights. To further differentiate itself, HarrisData has suggested a Software Customer's Bill of Rights to fundamentally alter the balance of power between software customers and vendors. The Bill of Rights is a result of over thirty years of experience, and is based on detailed surveys and discussions that discerned what customer value the most. The Bill thus revolves around the following nine items:
1. Right to Affordable Quality Software. Software that works as promised and that is delivered with a cost certainty.
2. Right to a Well-defined Implementation. An implementation timeframe that users can live with, with clearly stated objectives and project parameters, and with helpful advice by the vendor on how to avoid additional customizations and modifications.
3. Right to Unlimited Quality Support. Unhampered access to a qualified vendor's expertise, unlimited hotline and on-line inquiries, for the timely resolution of defects and bugs
4. Right to be Free of Vendor Control. No unwanted vendor interference in ongoing business. Access to source code if necessary, with the ability to extend the system for unique business requirements, and to contribute to the vendor product's enhancement process
5. Right to Business Growth. Reasonably rapid re-implementation when the user's business changes and with cost certainty during potential mergers and acquisitions.
6. Right to Prevent Software Obsolescence. Entitled to available software upgrades to meet changing business requirements, compliance, and regulatory updates mandated by regulatory bodies, and continuously evolve software architecture to leverage ever-changing technology
7. Right to Deploy Software without Restrictions. Unlimited number of client users, with high-availability and disaster recovery
8. Right to Improve Technology Infrastructure. The ability to facilitate and leverage infrastructure improvements)
9. Right to Quality Documentation. The availability of well-written, easy to understand documentation and duplication rights for legitimate uses
SOURCE:
http://www.technologyevaluation.com/research/articles/new-approaches-to-software-pricing-18324/
In the past customers have been disadvantaged in software contracts, facing numerous and expensive "fine print" clauses limiting their warranties. (See Is There a Panacea for Enterprise Software Pricing Yet?) However, in the new market, power is shifting from the vendor to the customer, and software negotiations are changing. Much to the delight of customers, some vendors are now differentiating their business strategy to accommodate administrative business needs and requirements. (See If Software Is A Commodity...Then What? and If Software Is A Commodity—Can You Still Win Some Competitive Advantage?.
Part three of the Is There a Panacea for Enterprise Software Pricing, Yet? series.
Vendors that are disadvantages because of their size, market clout, or brand recognition may want to differentiate themselves by designing and implementing a license agreement that incorporates the customer's priorities first. Rather than offering a traditional vendor-centric license that changes throughout the contract life cycle, at the customer's expense, this a kind of "all encompassing-license" captures most (if not all) of the customer's needs.
One stellar example is HarrisData (www.harrisdata.com), a privately-held Brookfield, Wisconsin-based (US) provider of integrated enterprise applications for medium discrete manufacturing enterprises in North America. The vendor has chosen a new methodology to administer its software by creating the Omni License approach. Customers obtain five years of maintenance and support, source code, upgrade and transfer capabilities, an unlimited number of users in a ninety-nine year perpetual license that is owned by the customer. This complete package ensures no unpleasant surprises for the user business and determines the total cost of ownership (TCO) up front. Moreover, the costs associated with the Omni License are generally the same, and in some cases, even less than the cost of a one year license from many of its competitors.
Because pricing information is given up front, this mid-market manufacturing vendor's approach has intrigued us. Payments are either in one lump sum, or in installments and covers virtually everything one could think of, including software, consulting, installation, service, upgrades, etc., for all available modules and for any number of users—without hidden surprises or contract clauses. After five years, if the user enterprise wants an ongoing service and maintenance contract, it will be available annually at a competitive price. The current cost is based on 10 percent of what the price of Omni License software was per year (which is still far less that the industry average). Like buying a car or furniture on credit, the vendor simply considers the transaction as completed after five years.
This is Part Three of a three-part note. Part One presented a problem analysis. Part Two discussed ERP Software service and maintenance alternatives.
Software Customer's Bill of Rights
Long and painful negotiations may provide some protection for customers, but today's software licenses still fundamentally protect the vendor's rights, and offer little protection of the customer's rights. To further differentiate itself, HarrisData has suggested a Software Customer's Bill of Rights to fundamentally alter the balance of power between software customers and vendors. The Bill of Rights is a result of over thirty years of experience, and is based on detailed surveys and discussions that discerned what customer value the most. The Bill thus revolves around the following nine items:
1. Right to Affordable Quality Software. Software that works as promised and that is delivered with a cost certainty.
2. Right to a Well-defined Implementation. An implementation timeframe that users can live with, with clearly stated objectives and project parameters, and with helpful advice by the vendor on how to avoid additional customizations and modifications.
3. Right to Unlimited Quality Support. Unhampered access to a qualified vendor's expertise, unlimited hotline and on-line inquiries, for the timely resolution of defects and bugs
4. Right to be Free of Vendor Control. No unwanted vendor interference in ongoing business. Access to source code if necessary, with the ability to extend the system for unique business requirements, and to contribute to the vendor product's enhancement process
5. Right to Business Growth. Reasonably rapid re-implementation when the user's business changes and with cost certainty during potential mergers and acquisitions.
6. Right to Prevent Software Obsolescence. Entitled to available software upgrades to meet changing business requirements, compliance, and regulatory updates mandated by regulatory bodies, and continuously evolve software architecture to leverage ever-changing technology
7. Right to Deploy Software without Restrictions. Unlimited number of client users, with high-availability and disaster recovery
8. Right to Improve Technology Infrastructure. The ability to facilitate and leverage infrastructure improvements)
9. Right to Quality Documentation. The availability of well-written, easy to understand documentation and duplication rights for legitimate uses
SOURCE:
http://www.technologyevaluation.com/research/articles/new-approaches-to-software-pricing-18324/
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