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9/6/2011
11:41 AM
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4 Factors Bloating Your Software Budget

Our research shows your team may be wasting software dollars. Also, mileage will vary for users of Salesforce.com's new licensing scheme.

InformationWeek Now--What's Hot Right Now
Nobody likes to leave money on the table, but CIOs hate to leave money on the table. Yet InformationWeek's recent research shows that CIOs are doing just that with some software buying practices. As Jonathan Feldman reports in his cover story on the research, plus related advice on how to beat rising software costs, four key hurdles stand in the way of you and a smarter software budget.

1. You don't know what you have and buy more than you need. For instance, some companies are doubling up on laptop and desktop licenses when one would suffice.

2. You're using valuable IT staffer time to manage licenses, when you could be automating the process using asset management tools.

3. You're not checking whether software is used, once installed.

4. The big one: For all the price pressure on traditional software vendors and renewed competition thanks to SaaS, today's software licensing remains complicated to decode--even for IT veterans. "It would be nice if there were licensing standards," Arnie DeWitt, CIO of Phillips Plastics, told Feldman.

"Microsoft's VDA license includes an 11-page white paper and a seven-page clarifying FAQ to help users through the complexities," Feldman writes. "Really? Does it have to be that complicated?" Contrast that to Google's approach with its Apps for Business, $50 per user, per year.

Unfortunately, not all SaaS licensing agreements are so cut and dry.

As InformationWeek's Doug Henschen reports, Salesforce.com unveiled a vision last week at its Dreamforce event that pushes well past CRM—and includes a new Social Enterprise License Agreement with an all-you-can-use option for Salesforce products.

"Instead of discussing seven different product lines and worrying about how many people will use the service cloud and how many call center agents to license, this approach positions us more strategically and, frankly, lets customers buy more from us," said George Hu, Salesforce.com's executive vice president of platform, marketing, and operations.

Not everyone will have to use this option; it's an option, not a replacement for Salesforce licensing, Hu said, perhaps anticipating enterprise angst the likes of which VMware has faced over licensing changes recently.

But Henschen doesn’t think this Salesforce.com buffet-style licensing will be simple to grasp.

"Reassurances aside, I'm guessing the new approach won't be published on the website because it sounds like it will be one-off and enterprise specific," Henschen wrote. "Like traditional software license agreements, it will undoubtedly vary greatly by the volume of users and the depth of the technologies used."

As Henschen points out, the "no-software" company also knows how to make its money.

Laurianne McLaughlin is editor-in-chief for InformationWeek.com. Follow her on Twitter at @lmclaughlin.

In the new, all-digital issue of Network Computing: Microsoft and Citrix are closing the gap with VMware. Before you roll out the latest edition of vSphere, reconsider your virtualization platform. Download the issue now. (Free registration required.)

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