In-Depth

From the BI Scorecard Blog: BI Licensing and Lawsuits—A Sure Sign of Failure

Buyers must beware, and vendors must simplify their licenses.

• By Cindi Howson
• 03/16/2011

Software licensing is never an easy topic for either the buyer or the seller. For buyers, it’s so much easier to discuss features and capabilities and whether or not the product is a good fit. For the seller, it’s so much easier to highlight why their company and product is the best.
So you do your POCs, confirm requirements, and capabilities, and at the 11th hour, bring in your purchasing department to negotiate the best deal possible. Relationship doesn’t matter here. Discounts do.

Buying BI software is particularly complex. Rarely can you buy the “BI suite” or “everything demonstrated;” instead, it’s a plethora of unclear choices between roles and products, server-based and named user, optional modules that the unsuspecting buyer would have thought was standard, maintenance based on list versus discounted prices, and so on.

There is a big disconnect in BI buying: buyers want as much as they can get at the lowest price. They certainly don’t want to be forced into the embarrassing (career-ending?) position of having to go back to the executive committee to garner more money for a BI module they overlooked. Vendors, on the other hand, want to extract as much value from the customer as their product warrants. Both want what’s fair.

If a customer upgrades their hardware and does not increase the number of users, should the customer have to pay a fee to the BI vendor? That doesn’t seem fair to me, but that is a consequence of server-based licensing that considers CPU-clock speed and power ratings. What about a report consumer who normally refreshes a report but now wants to drill down into the details? The capability to drill may involve a higher-level, role-based license. I don’t know many organizations that can track to that fine a detail exactly what users want to do, or even that can accurately anticipate how user requirements and capabilities will evolve overtime.

I cringe at the stories I hear. One manufacturing company has a full-time equivalent tracking BI licensing compliance. This doesn’t seem to be value-enhancing. Another health care company is in a legal dispute with its BI vendor, because it didn’t realize virtualization wasn’t explicitly allowed. The company also didn’t immediately disable logins for employees as they left the company, so they temporarily exceeded their named user license count. An influential BI consultant will never again recommend one product to a customer because of a miscount in the way the software tracked its license usage for one of his customers. A legal dispute followed. A different customer is abandoning a project because of sticker shock in wanting to roll the application out to more users.

I know there are some disreputable customers out there who use grey-market software, but most of the situations I’ve encountered are honest mistakes and the fault of vendors, with complicated licensing models, out of date with the dynamic infrastructures and workforces. Once a customer and vendor start on a legal dispute, any notion of a partnership in BI success is destroyed.

My recommendation to customers remains: buyer beware. Read and understand the fine print early in your evaluation process. Involve procurement early in the buying cycle. For vendors: simplify, simplify, simplify. Nickel and diming customers for a short-term profit is a recipe for longer-term failure.

I could speculate on why this problem seems to be growing: a difficult economy, mega-vendors that have greater account control, or vendors that know BI switching costs are high are just a few. You tell me: is this problem declining or increasing? How clear are you on your vendor’s licensing policies? E-mail me confidentially offline at cindihowson@biscorecard.com.

Best wishes,
Cindi Howson, www.BIScorecard.com

Copyright © 2011 by Cindi Howson and BI Scorecard; reprinted by permission of the author