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Software to become a buyer’s market, says Gartner

Competitive forces are converging to reduce software licence fees, says Gartner

The analyst company expected that leading application software providers would find themselves particularly challenged as end-user businesses looked to reduce software charges as they have done successfully with hardware and services costs in recent years.

William Snyder, research vice-president at Gartner, said: "We expect that over the next five to ten years, chief information officers (CIOs) and software procurement officers will have more bargaining power."

"Up until now the unique nature of the software market has meant that buyers had very little negotiating power after the initial purchase of a software licence," Snyder said.

But power will shift to the user, he predicted, due to the popularity of new delivery models such as the increased use of business process outsourcing (BPO) and software as a service (SaaS) and new business models such as open source offerings and third-party maintenance companies.

Snyder also believed the transition to service oriented architectures (SOAs), combined with the emergence of effective, low-cost offshore development options will give users greater choice and lower software development costs, allowing them to reduce dependence on the giant application suppliers.





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