Gartner’s had a good webinar series lately, including one last month with Alexa Bona on software licensing and pricing (link to “roll your own webinar” download of slides in PDF and audio in mp3 separately), as part of their series on IT and the economy. As enterprises look to tighten their belts, software licenses are one place to do that, both on-premise and software-as-a-service, but you need to have flexible terms and conditions in your software contract in order to be able to negotiate a reduction in fees, particularly if there are high switching costs to move to another platform.

For on-premise enterprise software, keep in mind that you don’t own the software, you just have a license to use it. There’s no secondary market for enterprise software: you can’t sell off your Oracle or SAP licenses if you don’t need them any more. Even worse, in many cases, maintenance is from a single source: the original vendor. It’s not that easy to walk away from enterprise software, however, even if you do find a suitable replacement: you’ve probably spent 3-7 times the cost of the licenses on non-reusable external services (customization, training, ongoing services, maintenance), plus the time spent by internal resources and the commitment to build mindshare within the company to support the product. In many cases, changing vendors is not an option and, unfortunately, the vendors know that.

There are a lot of factors in software licensing that can come under dispute:

• Oracle’s (and many other vendors’) definition of “named user” includes non-human processes that interact with the database, not just the people who are running applications. This became a huge issue a few years back when enterprise systems started being connected in some way to the internet: is the internet gateway process a single user, or do all potential users have to have individual licenses?
• Virtualization and multi-core issues need to be addressed; in many cases, these hardware partitioning is often not adequately covered in license contracts, and you need to ensure that you’re not paying for the maximum potential capacity of the underlying hardware, not what you’re actually using.
• Make sure that you have the right to change the platform (including hardware or underlying database) without onerous fees.
• Watch out for license minimums embedded within the contract, or cases where upgrading to a larger server will cost you more even if you don’t have any more users. Minimums are for small organizations that barely meet discounting thresholds, not large enterprises. Vendors should not be actively promoting shelfware by enforcing minimums.

Maintenance fees are also on the increase, since vendors are very reliant on the revenue generated from that in the face of decreasing software sales. Customers who have older, stable versions of a product and don’t generate a lot of support issues feel that costs should be decreasing, especially since many vendors are offshoring support so that it is cheaper for vendor to supply it. Of course, it’s not about what the maintenance actually costs, it’s about what the market will bear. Gartner suggests negotiating maintenance caps, the ability to reduce your maintenance if you use less licenses, and the right to switch to a cheaper maintenance offering. Document what you’re entitled to as part of your maintenance, rather than relying on a link to the vendor’s “current maintenance offering”, to ensure that they can’t decrease your benefits. Watch out for what is covered by maintenance upgrades: sometimes the vendor will release what they call a new product but what the customer sees as just a functional upgrade on their existing product. To get around that, you can try licensing the generic functionality rather than the specific products by name (e.g., stating “word processing functionality” rather than “Microsoft Word”).

When polled, 64% of the audience said that they have been approached by a vendor to do a software audit in the past 12 months. In some cases, vendors may be doing this in order to recover license fees if they have lost a sale to the customer and feel that they might find them out of compliance. Be sure to negotiate how the audit is conducted, who pays for it, and what price that you pay for additional licenses if you are found to be out of compliance. Many software vendors are finding it a convenient time to conduct license audits in order to bolster revenues, and for the first time ever, I’ve heard radio advertisements urging people to blow the whistle on their employer if they are aware of pirated or misused software licenses, which is a sort of crowd-sourced software audit.

Software as a service licensing has its pitfalls as well, and they’re quite different from on-premise pricing issues. Many SaaS contracts have minimums or do not allow for reductions in volumes, leading to shelfware-as-a-service – consider it a new business model for wasting your money on software license fees. There is aggressive discounting going on right now – Gartner is seeing some deals at $70/user/month for enterprise-class software – but there may be much higher fees on renewal (when you’re hooked). There are also some unrecognized fees in SaaS contracts: storage (if beyond some minimum that they provide as part of the service, which is often charged at a rate far above cloud storage on the open market), additional costs for a development and test sandbox, premium maintenance that is more aligned with typical on-premise enterprise software support, non-corporate use (e.g., customers/partners accessing the system), integration, and termination fees including the right to get your data out of their system. Make sure that you know what the SaaS provider’s privacy/security policies are, especially related to the location of the data storage. Most of the Canadian financial services firms that I deal with, for example, will not allow their data to be stored in the United States, and many will not allow it to be stored outside Canada.

Furthermore, SaaS vendor SLAs will only cover their uptime, not your connectivity to them, so there are different points of failure than you would have for on-premise software. You can hardly blame the vendor if your internet connectivity fails, but you need to consider all of the points of failure and establishing appropriate SLAs for them.

Bona finished up with some very funny (but true) reinterpretations of clauses in vendor contracts, for example:

• What the vendor means: “We are going to send you software that you are not licensed to use. If you use this software in error, you will be out of compliance with this contract, and woe to you if we audit.”
• What they actually wrote: “Licensee shall not access or use any portion of the software not expressly licensed and paid for by the licensee.”
• What you probably want to change it to: “Licensor shall not ship any software to licensee that licensee is not authorized to use.”

The summary of all this is that it’s not a task for amateurs. Unless you want to just let the vendor have their way with you on a large contract, you should consider engaging professionals to help out with this. Gartner provides this type of service, of course, but there are also high-quality independents (mostly former analysts) such as Vinnie Mirchandani.

Two weeks ago, Peter Shankman broke the story about a social media “expert” who twittered unflatteringly about a customer’s home city while on his way to visit them, and how the expert was slapped in the face with it by his customer. If you’re using social media such as Facebook and Twitter for business purposes, you’d better be aware of who can see your updates so as not to commit a similar faux pas.

For example, a search for “albpm” (the BEA BPM platform acquired by Oracle, and positioned as strategic in their product strategy even though it’s not clear how they intend to converge ALBPM and BPEL Process Manager into a single runtime engine without obsolescing at least one of them) shows an interesting tweet made yesterday by Paul Cross at Oracle:

It looks like he didn’t understand (prior to that point) that if he wants to use Twitter for making possibly controversial sales strategy statements like this, it’s important to protect his updates so that only the people who he follows can see them. By this morning, his updates were protected, but Twitter search keeps all unprotected tweets available for all time.

I haven’t heard much lately about the Oracle BPM product convergence; I’m sure that there are a lot of ALBPM customers out there who are hoping that this internal directive doesn’t mean the end of ALBPM.

Another company that is getting how marketing 2.0 works: Metastorm is publishing podcasts on iTunes (that is, you can get them without providing your personal information to Metastorm) as well as having a YouTube channel and customer success stories on their own site that don’t require registration.

I posted a while back about how Active Endpoints is publishing webinar replays (video) as well as audio podcasts and product release information (PDF) all in an RSS feed that I subscribe to in iTunes, no signup required. IDS Scheer has ARIS TV, also on YouTube. More companies are realizing that blogging is just the tip of the iceberg when it comes to new ways to interact with their audience.

Examples of companies that don’t get it: one who sent me an unsolicited email with a 2MB product brochure attached, with the comment:

As I see from your blog that you don’t like registering for basic information (which we currently require you to do at the moment on our website – although it is currently up for discussion!) I have attached our corporate overview brochure for you and would be happy to send you any other info you would find useful.

The point is not that I don’t like registering on vendor websites, it’s that no one likes registering on vendor websites. I’m not looking for special treatment, I want companies to change the way that they interact with anyone looking for information: the easier to you make it for someone to get information about your company and product, the more likely that they are to return to your site.

Oh yeah, while you’re all at it, can you please publish full feeds for your company blogs? With over 250 subscriptions in my reader, the chance of me clicking through to a vendor blog to read the entire post is near nil.

What does the IP addresses 137.69.117.21 mean to you? How about if you look it up through Network Solutions to see who owns it? Strangely enough, this is the IP address of a comment troll who has been attempting to add offensive comments here for the last several weeks, using a variety of anonymous email address and fake names.

I’m not surprised that I occasionally get comment trolls. I am surprised that they would come from inside the corporate network of a subsidiary of a large BPM vendor.

I’m headed off to Orlando tomorrow for the Gartner BPM summit that’s happening during the first half of the week, so watch for my blogging from there under the Gartner BPM category, which also holds my coverage from their February event. They’re also running the Event Processing summit at the same location for the rest of the week; I’ll likely catch a few of the sessions before I leave on Wednesday.

I have interviews set up with many of the BPM vendors while I’m there to get their latest updates, and thought that it would be a good idea to add a disclosure page on this site rather than having to remember to note which of them are my customers each time that I mention them in a post.

One of the things that always bugs me is having to register to get information from a vendor’s website, particularly basic product information such as brochures or webinars. I know that Marketing wants to collect potential lead information so that Sales can follow up, but I’m not sure how good the hit rate is on a cold call resulting from a website visit. Furthermore, there have been many times when I’ve not bothered to download product information because of a registration requirement, and I’m sure that a lot of people have had the same experience.

It makes sense to gather information if you’re distributing, for example, a Gartner report where you have to pay per download, but for the rest of it, why not just open up the information and let people see a bit of what you have to offer before starting to try to sell them directly?

That’s exactly what Lombardi’s done with their newly-revamped online BPM resource center: check out the videos of product demos available without registration. However, if you scroll down the page and request a brochure, you’re back to having to register — definite points off for that, guys. C’mon, it’s a product brochure, not some state secret, just give it away without a hassle.

I don’t usually repeat the standard PR blurbs that are sent my way every day, but this one piqued my interest: Jon Pyke, formerly CTO of Staffware before it was acquired by TIBCO, and co-founder of WfMC (and CEO of the Process Factory, although that never went very far) is joining Cordys as Chief Strategy Officer.

I’m never really sure about the CSO title: that’s the same one that Jim Sinur took when he left Gartner for Global360. Is it the “VP Special Projects” of this age?

I’m on the receiving end of a lot of demos, and they range (as you might expect) from “can’t tear myself away” to “let me put you on mute while I clip my toenails”. Over the past months, I’ve been compiling a list of things not to do when you’re giving me a demo.

1. Don’t come into the demo without knowing (in general) what I write about, particularly what I write about vendors. Snorting derisively about the fact that I write a blog is not going to score points for you, either.
2. Don’t patronize me, for example by using the phrase “and now I’m going to tell you a bit about something called simulation“. Assume that I know at least as much about BPM as you do. Probably more.
3. Don’t spend 40 minutes showing me PowerPoint slides before you get to the demo. I’m here for the demo, and if you ignore that fact, then I just switch screens and read blogs while you’re talking.
4. Don’t (try to) bullshit me. If you don’t have X in your product and I say “hey, it looks like you don’t have X”, admit it and discuss what you’re doing to address that (if anything) rather than trying to distract me with something shiny.
5. Don’t make me pay for the phone call. If you don’t want to spring for a toll-free dial-in number, then offer to call me directly: after all, you’re probably going to get some free publicity out of this in the end.

Having been on the vendor side as well (although not in Sales), I know that’s not always a picnic either; I’d love to hear the flip-side of this list.

eBizq announced today that Peter Fingar has joined Bluespring Software’s advisory board to “provide advice, assistance and guidance on future releases of Bluespring’s BPM technology and contribute thought leadership towards the evolution of the company’s business model”.

We all have vendor biases, and I count a few vendors as my customers, but to join the advisory board of one company seems to be taking oneself firmly out of the ranks of the independents.

I’m spending a few days going through some “virtual lab” FileNet training courses. Although I’ve worked with their BPM software with my own customers for over 10 years, and even worked for FileNet for a brief (but very informative in terms of corporate politics) period, it’s always a good idea to keep on top of the new versions. The virtual labs are a huge improvement over classroom training for me: not that I don’t want a trip to California, but hey, I’m the one paying for it, and I can’t just walk away from my real life for a couple of weeks. These are really well done, too: full classroom materials and notes, lab exercise books, canned (Flash) demos of how to complete the exercises, online access to a FileNet P8 system, and very responsive technical support. Since I already know a great deal of what’s in the course material (I think that I wrote some of it!), I can zip through pretty quickly without being bogged down by newbies in a classroom.

The cost of FileNet — and other vendor — classroom training just doesn’t make sense for the small incremental value that I would get from it: to become certified in a product via classroom training would cost me thousands of dollars in course fees alone, plus travel expenses and lost revenue opportunities. Considering that no single product is more than a small part of my current business, the cost-benefit analysis just doesn’t fly. FileNet has made it hugely attractive to partners to take the virtual lab courses right now, probably because there’s a lot of other partners out there running the same numbers and coming to the same conclusion: for occasional business, and especially for small/one-person shops like me, this stuff is way too expensive. Most of what I do with my customers, even on a FileNet-related gig, has nothing to do with FileNet: I’m a strategic IT planner/architect, so it’s about developing a strategy for selecting and applying technology to business, high-level business process redesign, enterprise architecture and a host of other things. When we do get down to the planning and design of the FileNet-based solution, I need to know portions of the product well, but it’s usually a small part of my engagement and you can be sure that by then, there’ll be people around with the full installation, administration and developer certifications.

For those of us who make it our business to know multiple vendors well and who have been involved in actually implementing (as opposed to just selling) systems, we bring value to our customers not because we’re certified with any particular vendor, but because we understand how the rubber hits the road. In other words, I want all (or most) of the training that I would need to be certified by the vendors, but the vendor certification itself means very little to me or my customers. I’m selling my expertise and experience, not reselling my investment in vendor classroom training.

Message to vendors, #1: Stop trying to make money on partner training: it should be a loss leader and considered a cost of sales development. I have a big problem with paying you thousands of training dollars to give you a knowledgeable player (me) in the field that helps you sell more software, when I’m doing consulting that is often quite peripheral to your product. If I meet the requirements of your partner program, give me your software and train me for free, or for very cheap. That goes for conferences as well: if I’m good enough to be in your partner program, don’t charge me thousands of dollars to attend your partner conference, because by the time that I add my travel expenses and lost revenue for the week, it’s not worth it.

Message to vendors, #2: Plan your certification programs to include people like me, who do strategy, planning and design, but don’t do coding or installs. Although I’ve done it in the past, I’m very unlikely to be writing code or installing systems any time soon. I use the term “BPM solution architect” to describe what I do on a BPM project, but that term has somehow been perverted to mean either a pre-sales technical consultant (by FileNet, for example) or a programmer (by wishful-thinking customers who believe that one person has the experience to do the design and architecture, but still has a low enough price point and is not too rusty to do the coding).

Sure, if you make the training free, then you’ll spend some time fending off people who aren’t serious about your product or even capable of understanding it. However, charging a large fee for training definitely means that you cut out the small, very capable players (because we can do something unrelated to your product equally well), and based on my experience with large, well-funded systems integrators and consultancies, there’s no guarantee that the ability to pay is accompanied by the ability to do something good with your product.