How to Negotiate Better Software Licensing Deals - Page 2

Aug 12, 2009

Scott Rosenberg

Understand your short-term and long-term needs. Be sure that someone is present who can articulate the impending needs of the organization a minimum of 12 to 18 months in advance to plan for future software acquisitions. Remember to negotiate short-term agreements to allow flexibility for the business. For example, Hyperion (now an Oracle company) increased pricing on June 1, 2009 in order to align itself with its parent company’s price lists. A savvy CIO would renew or purchase Hyperion before the price change, while ensuring that long-range terms and conditions have some built-in flexibility and agreeing to concessions that would bring added value to the SLA.

Legal and IT need to work together. Aside from having a lawyer review software vendor agreements, it is critical to have it reviewed by a senior IT executive who understands the corporate strategy and business objectives as well as a specialist in licensing “best practices”. It would be best if that senior executive and specialist were one and the same person. Why? One example: several vendors include a clause stating that any new contract supersedes the terms and conditions of any previous contracts with the company. This standard language can be found in most legal contracts, and lawyers seldom change the wording. But, in this case, it certainly is not a best-practices scenario for a company. That small clause results in giving up potentially rich and extensive use rights to assume more limited and restrictive use rights, leading to all the additional fees we have discussed earlier.

Avoid ambiguous language. Make sure contract language is frequently reviewed. Publishers are pressured to make changes necessary to reduce complexity and the probability of future license disputes. All verbal agreements need to be backed up by a paper trail. This seems obvious, but you’d be surprised at how many people forget this during the negotiation period.

According to Gartner, “During the next few years, [sic] businesses need to devote more time to planning and preparing for software purchases because this will be a challenging period for software licensing. During periods of uncertainty, it's harder to negotiate lasting contractual protections.”

While I believe that each situation is unique, compliance is the key to building advantages into software vendor contracts and getting a better deal.

Scott Rosenberg, CEO and founder of Miro Consulting, is responsible for creating and driving the vision of the company. Today, Miro Consulting has over 400 clients across North America and has overseen more than $1 billion in Oracle and Microsoft transactions. Mr. Rosenberg is considered an expert on Oracle and Microsoft licensing and is frequently quoted in ComputerWorld, CIO, CRN, eWeek and InformationWeek.

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