Legally Illegal

Last year was a very difficult year for most software companies with slowdown in new licence sales that brought in a negative trend in new business revenue. This happened very quickly after the globally experienced slowdown a few years back compounding the issue. This had all software vendors almost like acting in unison deciding to engage their existing customers in licence audits. If you cannot get new revenues, let’s squeeze some juice out of existing lemons.

So these engagements began to look all over the place; the data centres, servers hidden under tables, desktops converted to servers for a simple test or proof of concept, users created though inactive, resigned employees not deactivated, it did not matter what the event was, if there was an user identity or a database, or an instance of the application, it needed to be licenced. Office automation and other fringe app vendors joined the fray and added to the already harried CIOs blood pressure.

No debate that licence compliance is non-negotiable; licences for software or product or package used for the enterprise that in any way impacts a business process. Most vendors allow disaster recovery to be setup at nominal or no extra investment as long as it is not used conjointly with the production environment. That looks like a good principle though some complicate matters based on number of days used even when the primary was down and not operational.

Some also allow test and development instances to be setup; interestingly most do have a licencing policy that charges the customer, however most sales teams shy away from highlighting this fact during the pre-sales discussions or even when the purchase order is received. Instead they give the CIO a fine printed legal document to sign without pointing out to the salient points that the customer needs to be aware of. I don’t know of CIOs who read those wonderful documents; it’s like pressing “I accept” when we enrol to a new website or app.

So far still so good as each instance expects the customer to get into an engagement with eyes and ears open; the principle being we gave you the full documents, you read and sign or you don’t read and sign, that is a choice. The discussion gets interesting when new or additional licences are required even if a line of code is changed or added to any screen, form or report or an add-on deployed. This now attracts additional investment, sometimes a lot more than bargained for. Now that is hitting below the belt !

If I may add, the same vendors participate during the pre-sales gap analysis and bid and quote for customizations through their consulting arms vying for implementation business. But no mention that if the customer did end up customizing, then … This aspect of licencing is rarely discussed if at all and mostly comes up during licence audits leaving the CIO gasping for life. The management demands that the CIO know all this as it is his/her job to know and manage the vendor.

Page number XX, clause YY, sub-clause ZZ in the sales agreement is cited as the reference for the new demand. Read it and if you can figure it out differently let us know; else here is the bill of material and the timeline in which you need to buy. Consequences you know are not something you want to talk about. Sheepish acceptance and wows to be more careful and read all the fine print is normal behaviour; the management takes a not-so-kind view but goes ahead with the devils choice.

Why does this charade repeat itself globally with many vendors, some more than others ? It does not matter which industry, which country or geography, size of the customer (in fact the bigger the better as they are averse to the publicity it draws), this is becoming one of the relationship breakers between the impacted CIO and the vendor. Stories of these are rarely published by publicity shy individuals and enterprises. Is there a way out ?

I believe there isn’t an easy way out; negotiating from a compromised position does not get any great deals; neither does it do wonders to CIOs careers. Whether they like it or not, CIOs have to get more diligent in their approach to legalese and contracting. As the markets saturate and mature, read changes to changing end user contracts and/or licensing terms. You never know what impact it has on your company.

How much of IT do we use ?

Every so often the question comes up which IT and business is expected to answer. “How much of the features of the ERP/CRM/SCM/… do we use ?” How do we increase this to gain the most of from the investment made ! And everyone gets down to analyzing the feature set once again, painstakingly attempting to move beyond the standard 30% number in the good implementations. Many CIOs struggled in the last year or so to provide a rationale or undertook the task to improve the usage. The expectation needs some careful analysis to understand why this question comes up periodically and specially in difficult times when other investments are scarce.

When organizations invest large budgets into any commercially available standard software solutions, the expectations set by vendors, IT team and occasionally the business project lead tend to indicate that upon implementation, the enterprise will transform itself from current state to a highly optimized state giving it a significant advantage in the industry. This overselling of benefits continues even today many decades after the 3-letter solutions entered the IT arena.

Any large generic solution coupled with industry specific templates or add-on modules will be feature rich in its endeavor to address all types of scenarios irrespective of whether they occur with your specific organization or not. Based on the specifics of every company, some of these are executed, while others are deemed not relevant. Thus starts the journey of partial usage, which is accepted during the project. Over time, the vendor continues to evolve the solution based on customer feedback and industry evolution, and companies may adopt incremental functionality or not.

I believe that CIOs should draw parallels from other commercial products to educate the business on why usage will always remain sub-optimal when measured as a percentage of total available features. An example could be the humble cell phone which people buy based on new features that are added faster than most of us can comprehend. 90% of the users including the same corporate teams, who berate the IT solutions inadequate usage, do the same with these devices. Or move the lens towards television sets, which we all buy after careful evaluation to only use the most basic features.

We keep on upgrading office productivity solutions like word processors, spreadsheets and presentation tools, but rarely evolve beyond the earlier feature usage. Why do we then run after every new version ? To remain current and compatible off course; can the same apply to our ERP/CRM/… solutions ?