Avoid the software sting

It is time the customer stopped signing soft-on-stiffing contracts and for the entire industry to make a pariah out of a...

It is time the customer stopped signing soft-on-stiffing contracts and for the entire industry to make a pariah out of a pro-stiffing supplier, writes Julia Vowler

Marx might have told his followers that it was not enough to understand the world, they had to change it as well. But the latter cannot be done until the former has been accomplished. We can't solve a problem until we know what causes it.

Computer Weekly's Stamp Out Stiffing campaign is dedicated to the abolition of the infamous practice whereby software suppliers impose punitive charges for deviations from the terms and conditions of a software licence even though, from the user's point of view, there has been no material gain by themselves from the change incurred.

These deviations can concern such simple manoeuvres as moving the location of the datacentre or running the software on a different box.

Computer Weekly is not alone in this battle, organisations such as Eurim are hard at work, via working parties on fair dealing seeking, to move the IT industry away from the practice. There are even software suppliers, both large and small, such as IBM and Beta Systems, which are publicly committed to the demise of stiffing.

But what are the anti-stiffers up against? The resistance to abandoning stiffing, and moving to a software licensing environment in which charges by suppliers are related solely to the actual benefit accruing to the licensees, occurs at two economic levels - micro and macro.

The micro level is simple. As Eurim working party member Geoff Petherwick of the UK Computer Measurement Group points out bluntly, individual account managers will be set revenue targets by their managers and will seek all means to attain them. If they find a vulnerable clause in a contract which enables them to make a few (or quite a bit more than a few) thousand pounds by activating it, then they will. If they reach their targets oneyear,their managerswill simplyset highertargetsthe next year, upping the anteyet again.

And, as all canny users know, the best time to strike good deals with software suppliers is when the sales people are hungriest to meet their quotas at the year end - the pressure works both ways.

The macro level is equally simple. What percentage of its revenues does any individual software supplier make out of stiffing, and how does that scale up for the software industry as a whole?

If that percentage is high, then the software industry as a whole will fight tooth and nail against the closing down of that revenue stream - just as the automobile industry is fighting against cutting car prices in Britain. Given the source of corporate financing for public companies they have no choice - reduced revenues will cause influential financial analysts to mark their stock price down. It is not the duty of public companies to fail to maximise their profits for shareholders.

Clearly the profit-seeking imperative cannot be reversed but if anti-stiffing is to succeed without recourse to corrective legislation it has to tap into other parameters in the profit-maximisation equation. One such parameter of course, is that of time, which Microsoft has found to its cost. In the long term, has Microsoft's commercial strategy benefited its shareholders whose shares nose-dived thanks to the anti-trust ruling?

Another parameter to address is cost. As the managing director of one anti-stiffing software company points out, it's a waste of his sales staff's time negotiating complex contracts that can easily run to a 100 pages. Keeping it simple - such as by applying the kind of model fair contract that Eurim is busy drawing up - also means keeping the cost of sale down.

Cutting the cost of being in business is the rationale behind Eurim's exploration of whether suppliers that issue fair contracts can reduce the cost of professional indemnity insurance, often a substantial expense for suppliers.

But even though the cost of litigation, and the threat thereof, whether in the courts or by arbitration or alternative disputes resolution, is a powerful prod the law seems shamefully toothless about stiffing.

Of course, as the Computer Weekly campaign hopes, "naming and shaming" is another source of pressure that can be imposed - as well as the reverse, signing up committed anti-stiffers on the supply side. But the only real source of pressure is financial.

The bottom line on stiffing is that software suppliers will go on doing it because they can and want to. Only when the entire IT industry - and the Wall Street analysts - make a pariah out of a pro-stiffing supplier will the practice end. Stiffing has to become commercial suicide.

While users sign new soft-on-stiffing contracts, or continue to be strangled by legacy contracts, suppliers will continue to make pious anti-stiffing statements while turning a blind eye to their account managers treatment of their customers.

Making anti-stiffing the industry norm will be an uphill struggle. As history proves time and time again, power is never given away, it is only ever wrested. Is it time for the dictatorship of the customer?

This was last published in April 2000

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