Updated: Jun 25
Season’s Greetings, dear clients!
Here’s the second annual “Naughty Vendor List” from your friends at ClearEdge – a tally of tech suppliers whose recent practices may merit a fat lump of coal in their respective stockings. We hope you enjoy our last blog of the year!
IBM – with its lowest annual revenue since the turn of the century – has resorted to using software licensing reviews (a.k.a. audits) to make more money. Clients that previously reported being audited by Big Blue once every five years or so now complain that they’re being notified of an audit before every ELA renewal.
Salesforce removed all renewal cap language in their standard Master Subscription Agreement (MSA) this fall, which allows them to go as high as current list price on renewals. If you don’t negotiate renewal terms in your purchase order document, you could face unexpectedly high costs on your next term. This practice is so recent that customers have yet to feel its effects, but we anticipate that new Salesforce customers will bear the brunt of the changes. The solution: redline the MSA and insist on renewal caps before signing!
ServiceNow is bombarding its customers with two major releases a year, forcing them to upgrade to the new product families in order to continue receiving support. The new releases are named after cities around the word in alphabetical order, and this year brought us “Madrid” in March and “New York” in September. The new offerings promise enhanced features -- and in reality, they come with price increases, new licensing metrics as well as changes to the previous products’ functionality. This practice results in an ever-changing product environment for customers, marked by pricing uncertainty, confusion at renewal time, and higher costs to maintain support.
After several legal imbroglios that favored SAP, the vendor is striving to provide a transparent licensing model for users who unintentionally access their software. This is the company’s second attempt to remedy the issue, and it’s called the Digital Access Adoption Program (DAAP), which is now being heavily promoted. SAP insists that customers are free to pick the “best and lowest-cost licensing option” from the program. However, the supplier is including Digital Access in its proposals -- whether the customer wants it, needs it, understands it, or not. In short, much confusion persists surrounding Digital Access, despite SAP’s “pursuit to provide licensing transparency.” Not nice!
Oracle is up to its old tricks, trying to generate revenue on open-source products that come with ambiguous licensing terms. Last year, Java was the main culprit that caused an uproar among Oracle customers, and today we are seeing Oracle going after VirtualBox customers who have inadvertently downloaded the extension pack, a commercial perpetual feature which requires licensing from the supplier.
Cisco’s Smart Licensing looks really smart, for the supplier: with no formal notification, the company added its Smart Licensing program to the latest IOS upgrade for its campus switches about 18 months ago, and this major change in licensing enforcement is now being felt. Clients enter into Smart Licensing when they upgrade to IOS XE 16.9 and it affects users of Catalyst 3650’s, 3850’s and 9000’s. The program requires your network to communicate with Cisco weekly to authorize your network operations, and transfers the management and monitoring of license entitlement, deployment and renewal onto Cisco’s servers. This gives Cisco a full picture of your hardware and software deployment, makes price holds necessary to avoid paying a premium for any over deployments, and severely limits your ability to opt for third party solutions. In short, the vendor has taken control of your network and increased your operational costs by decreasing your alternatives.
BMC is now forcing customers to sign three-year deals. The mainframe software supplier is taking advantage of customers who don’t have renewal terms in their contracts. Recently, a customer requested a one-year renewal, but BMC does not like to offer these and responded with a proposal that more than doubled the client’s one-year cost for the solution. (BMC reps are compensated on long-term renewals, so they also offered an alternative three-year renewal deal with a 7% increase over the most recent annual spend.) The vendor knew that the customer needed its solution to run a legacy application, and could not walk away. Meanwhile, a good renewal with this vendor for three years typically sees a 15% reduction in cost. Very naughty behavior, right?
We wish you all a joyful holiday season and a healthy, prosperous New Year!
- From your friends at ClearEdge