Gartner says: Enterprise software costs to drop
by Jevon MacDonald
Analyst Gartner predicts vendors will find themselves increasingly challenged as IT departments look to reduce software costs as they have done with hardware and services.
In a research note Gartner VP William Snyder said: “Up until now the unique nature of the software market has meant that buyers had very little negotiating power after the initial purchase of a software licence. We expect those dynamics to change considerably over the next five to 10 years giving CIOs and software procurement officers more bargaining power while potentially reducing software vendor profit margins.”
The trend we have all been talking about for the last 5 years (at least) has finally made it in to a Gartner research note. Where Gartner nails it is in identifying the major trends that are pushing prices down:
- Business process outsourcing
- software as a service (SaaS)
- low-cost development offshoring
- modular architectures and service-oriented architectures
- the emergence of third-party software maintenance and support
- growing interest in open source
- the rise of Chinese software companies
There are more than enough bloggers and analysts who are watching these trends more closely than I. The key for anyone who is involved in software purchasing is to know that this trend is accelerating, and that you can absolutely negotiate on software pricing. People like Vinnie Mirchandani are who you need to have on your side of the table.
