Price Revolts in the Future
April 16, 2009
I continue to be surprised at the aggressiveness in some of the mainstream Web publications. A representative example is the ZDNet story by Dennis Howlett, “Corrupting Consolidation.” The title threw me, and I think that quite a few people will skip the story because the two word phrase does not resonate. A better title is “Price Revolts in the Future for Enterprise Software?” I think you will want to read the story here and maybe print it out. There are some gems in the write up, and I hope Mr. Howlett’s viewpoint gets wide uptake. The key point in the write up in my opinion was:
This is where we’re at: mega vendors desperate to maintain earnings using a broken model that shovels more product onto the market, hoping that customers remain locked in while maintenance costs go through the roof. It’s toxic and corrupting in no less a way than you might find on Wall Street.
Tough stuff. The point is that in a lousy economic environment, companies have to control costs. Mr. Howlett revealed his approach:
I took the decision to cut all payments to the vendor concerned, calculating I could save the then 60% effective cost burden while I worked out a replacement. At the time, the vendor was one of a very small number that could tie me in knots if they chose. I took the risk and it worked out OK. Sure, there was a good amount of strong arming along the way but I dug my heels in and came out on the top side.
“Customer revolt” was the phrase that crossed my mind.
What about enterprise search or content management? Both of these types of enterprise software are expensive to license, customize, maintain, and operate. What happens if an open source search system catches fire or SquareSpace.com jumps into the enterprise Web content management cesspool?
My view is that there are three interesting options that warrant further study:
- Open source moves from the sidelines, pushes the stars off the field, and becomes the next big thing. There’s quite a bit of interest in open source and newcomers appearing despite the financial craters dotting the landscape. Example: www.lucidimagination.com and www.lemurconsulting.com
- The big boys give away their systems either by bundling them or shifting to a services model. IBM is heading this way with its push into business analytics consulting and the “news” releases to this effect. Microsoft may be headed in this direction with the star-crossed Fast Search & Technology acquisition
- Cloud computing delivered by the parental Amazon.com or the dozens of companies chasing this buzzword choked approach to time sharing and managed services. Cisco, IBM, Microsoft, and others are ready to give companies a way to cut costs by repurposing or rationalizing staff. Translation: fire people.
Will other ad supported online Web services take the same tough stuff stance as ZDNet and Mr. Howlett? I hope so. I am getting tired of news releases and me too companies.
Stephen Arnold, April 16, 2009
Comments
-
- Subscribe to Beyond Search
Feature archive
News archive
-
