It was interesting to see two old golfing buddies-Amy Konary and Robert Mahowald of IDC -collaborating in a press release on June 4 that says:
"more than 60% of respondents believe that now is a good time to negotiate steep discounts for traditional on-premise software."
The statement is based on an IDC survey conducted in April as part of what IDC calls its Enterprise Panel (IEP). The IEP is comprised primarily of U.S. respondents and surveys both IT and LOB executives.
Actually I played golf with Amy only once and neither she nor Robert is old. However, I would hope that the 60 percent is actually on the low side. You should feel that any time is the right time to negotiate discounts on both on-premise and service-delivered software. It's not just something for IT managers to do because of the economic downturn. Buying enterprise software is like buying cars; no one pays sticker price. In fact, it's somewhat like buying used cars (but I may be stretching the analogy here) if you agree with what some bloggers say about enterprise software sales people.
Really stretching the analogy with the auto industry, I fear that enterprise software prices will rise in 2010. They say auto prices in the U.S. are set to rise 5 percent or more (from 2008 prices, not today's severely deflated bargains) because the Obama administration has eliminated or is eliminating thousands of Chrysler and GM automotive retail outlets (known as dealers). Reduced competition leads to higher prices.
The ongoing consolidation of the enterprise software industry will eventually have the same effect. As Amy says:
"In order to survive the downturn and position for growth in an eventual recovery, software companies will have to evolve their go-to-market approach, and subscription pricing and SaaS will play a key role."
So help the economy and buy enterprise software now (by now, of course, I mean the week before the quarter closes for your software supplier).
The full research results are available via a webinar being presented this month by Amy and Robert and to direct clients of the IEP.