Don't pay for shelfware!

Eric Knorr: Times are tough. With Microsoft using licensing arrangements to boost profits, IT managers should fight back by checking whether they actually use all the software they pay for.

Surprise, surprise. Last week Microsoft beat analyst estimates for its first fiscal quarter, in large part because it rolled its customers over to a new subscription plan that has in many cases extracted a heavy toll.

Seeing Microsoft get fat from strong-arm tactics seems to infuriate people even more than, say, Enron incensed Californians by bilking billions in bogus energy charges. Fortunately, no other software company has the kind of clout enjoyed by everybody's favorite desktop monopolist. So if you haven't done so already, it's time to revisit your software licensing agreements across the board and see if you're paying too much for software you're already using. Or not using: Gartner estimates that 20 to 25 percent of all software ends up as shelfware. Don't you deserve to get some of that money back?

Very likely you can. IT shops tend to be a lot more effective at managing hardware assets than software assets. Why? Because software purchases have a way of creeping in at the departmental level, to the point where many businesses aren't even aware of all the software they're running. Not to mention that volume licensing agreements are often maddeningly obscure. How many times have you begun reading the fine print of an agreement only to have your eyes glaze over after a few paragraphs? Often, you'd rather just pay the bill than screw down the last decimal point of exactly what you're paying for.

Complexity isn't the only reason for this avoidance behavior. Certain C-level officers have been known to swallow glitzy new technologies hook, line, and sinker -- and hand them off to IT like they're salvation in a box. You may not want to fess up that you never got the software to work or that it's still sitting on the shelf with the shrinkwrap intact. But it's time to forget about the potential embarrassment, since you may still be paying for that shelfware.

Even if you bought a "perpetual" licence, unless you make a phone call to end the relationship with the software vendor, you may still be getting billed. Typically, 10 to 20 percent of the cost of enterprise software goes to periodic bills for upgrades and tech support. You'd be surprised how many companies keep paying those fees even when they're not using the software -- or, conversely, even when they know how to use the software better than the vendor's support staff.

If the software is playing a productive role, you may still be able to save some cash by ensuring you're not paying for too many seats. This is especially relevant if you've downsized. Many people assume that if they paid for a 20-seat licence, a deal is a deal, even if only 15 people use the software. In fact, depending on the licensing structure, you can often go back and renegotiate. And remember: Seat licensing is generally based on the number of simultaneous users, so if you stagger which people use the software at what times, you can pay for fewer seats. Moreover, during boom times, software was sometimes licensed according to bizarre metrics: some licensing fees were even tied to the number of people in the company rather than the number of seats. That could mean a huge potential savings if your company has suffered extensive layoffs.

Finally, take advantage of expiration dates. Don't assume that because you paid a certain amount a year or two years ago, you have to keep paying the same amount. Times are tough all over. There's no law against playing hardball to get a better rate or extra support or special upgrade deals. These days, few software vendors will risk losing a customer in order to maintain rates that were set when times were fatter than they are now.

Of course, a large company in Redmond doesn't seem overly concerned about that liability. If you're sitting tight with Office and/or Windows 2000 and seriously considering open-source alternatives, you'll be happy to learn that not only is Sun's StarOffice is getting closer to viability, but that the venerated entrepreneur Mitch Kapor (remember Lotus 1-2-3?) is on the cusp of releasing an open-source competitor to Outlook. Remember, however, that open source isn't the same as open season: The GNU General Public License that governs most open-source software has certain restrictions (particularly relating to modification) that some enterprises may not be comfortable with.

But with no end to tough times in sight, it's time to consider all options, especially after IT has paid so much for so little. Getting new IT initiatives off the ground is so tortuous these days, not only does the chief financial officer get involved, but the board of directors may even give you the third degree. The more money you can squeeze from software operating costs, the better chance you have of scaring up the funds you need keep IT healthy without attracting unwelcome attention.

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