IT chiefs voice concerns over the transparency of software contracts

IT directors must play a stronger hand as deals grow more complex

The threat of software suppliers hitting user organisations with explicitly unfair terms and conditions in their licensing contracts has receded in recent years, as IT directors have become more business savvy and wised up to some of the sharp practices used in the past.

However, IT leaders are increasingly concerned that the desire of software suppliers to maximise returns from their existing customers is making life tougher in other ways, leaving IT organisations struggling with ever-more complex and opaque software pricing models.

The Computer Weekly CIO Index highlights both the increasing amount of management time taken up by software licensing and a growing frustration about perceived value for money.

George Kalorkoti, head of IS at law firm Herbert Smith, said the first challenge for IT leaders was to ensure that software contracts were clearer and more even-handed, so as not to strengthen the hand of suppliers further down the line.

"The vast majority of suppliers offer you a contract that gives them lots of rights and gives us lots of responsibilities. Before you sign a contract, you need to bring your supplier back to reality."

Owen Williams, head of IT at estate agency Knight Frank, said he believed that relationships with key software suppliers over licensing had worsened as complexity had increased.

"We are having to spend more time managing software licences with no benefit to our business," he said.

Crossrail's head of technology systems, Michael Pincher, said he had seen relations with some suppliers deteriorate once a contract was established.

"One needs to be robust with software suppliers and question their assumptions. Quite often it is not the sort of relationship you would like to have as a regular customer.

"From some suppliers we now get rather terse e-mails saying that our maintenance is about to expire. It is a question of standing firm rather than simply paying their maintenance and support agreements," he said.

Pincher said a recent stand-off illustrated the prickly nature of some relationships. When Crossrail had problems with the functionality on a suite of software products and called in the supplier to work on a fix, the supplier responded by initiating a software audit at the organisation.

"It is hard to avoid the conclusion that some software suppliers see organisations that are already using their software as cash cows to meet their development costs," he said.

IT directors said they welcomed some of the added flexibility in licensing in recent years, but this had clearly come at the price of greater complexity.

Myron Hrycyk, IT director at Unipart Aftermarket Logistics, said, "You can certainly licence in more ways now - per seat, per processor, per site or along business parameters. I also welcome the addition of subscription licensing. But while I like to have different models to look at, it is very complex."

In the public sector, some organisations have benefited from the enterprise licensing arrangement agreed between the Office of Government Commerce and suppliers, but many still face balancing a range of different licence models.

Ben Booth, chair of British Computer Society IT directors group Elite, said complexity was unavoidable, but there was no quick fix on the horizon. "My feeling is that firms cannot do that much about it. It is just something they have to learn to live with and address," he said.

Read article: How to avoid nasty surprises in your software contracts

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