Software // Information Management
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2/8/2011
12:07 PM
Cindi Howson
Cindi Howson
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BI Licensing And Lawsuits: A Sure Sign Of Failure

A plea to simplify complicated and out-of-sync business intelligence software purchasing terms.

Software licensing is never an easy topic, for either the buyer or the seller. For buyers, it's so much easier to discuss features and capabilities and whether or not the product is a good fit. For the seller, it's so much easier to highlight why their company and product is the best.

So you do your proof-of-concept analyses, confirm requirements, and capabilities, and at the eleventh hour, bring in your purchasing department to negotiate the best deal possible. Relationship doesn't matter here. Discounts do.

Buying BI software is particularly complex. Rarely can you buy the "BI suite" or "everything demonstrated"; instead, it's a plethora of unclear choices between roles and products, server-based or named-user licensing, optional modules that the unsuspecting buyer would have thought was standard, maintenance based on list versus discounted prices, and so on.

There is a big disconnect in BI buying. Buyers want as much as they can get at the lowest price. They certainly don't want to be forced into the embarrassing (career-ending?) position of having to go back to the executive committee to garner more money for a BI module they overlooked.

Vendors, on the other hand, want to extract as much value from the customer as their product warrants. Both want what's fair.

So if a customer upgrades hardware and does not increase the number of users, should the customer have to pay a fee to the BI vendor? That doesn't seem fair to me, but that is a consequence of server-based licensing that considers CPU-clock speed and power ratings.

What about a report consumer who normally refreshes a report, but now wants to drill down into the details? The capability to drill may involve a higher-level, role-based license. I don't know many organizations that can track to that fine a level of detail exactly what users want to do, or that can accurately anticipate how user requirements and capabilities will evolve overtime.

I cringe at the stories I hear. One manufacturing company has a full-time equivalent tracking BI licensing compliance. This doesn't seem to be value enhancing. A health care company is in a legal dispute with its BI vendor because it didn't realize virtualization wasn't explicitly allowed. The firm also didn't immediately disable logins for employees as they left the company, so it temporarily exceeded a named-user license count.

One influential BI consultant will never again recommend a particular product to a customer because of a miscount in the way the software tracked its license usage for one of his customers. A legal dispute followed. Yet another customer is abandoning a project because of the sticker shock it faced when it explored rolling out a BI application to more users.

I know there are some disreputable customers out there who use grey market software. But most of the situations I've encountered are honest mistakes and the fault of complicated licensing models that are out of sync with dynamic infrastructures and workforces. Once a customer and vendor enter a legal dispute, any notion of a partnership in BI success is destroyed.

My recommendation to customers remains: buyer beware. Read and understand the fine print early in your evaluation process. Involve procurement early in the buying cycle. For vendors: simplify, simplify, simplify. Nickle and diming customers for a short-term profit is a recipe for long-term failure.

I could speculate on why this problem seems to be growing: a difficult economy, mega vendors who have greater account control, vendors who know BI switching costs are high. But you tell me: is this problem declining or increasing?

How clear are you on your vendor's licensing policies? Post a comment here, or if you are worried about a backlash, e-mail me confidentially at cindihowson@biscorecard.com.

Cindi Howson is the founder of BI Scorecard, an independent analyst firm that advises companies on BI tool strategies and offers in-depth business intelligence product reviews.

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