Paying the rent

Rental software models are hot these days, not because customers are clamouring for them, but because software vendors want more revenue and are determined to persuade us all that this is an inescapable trend, and good for us besides.

ManagementSpeak: It pays to be flexible in determining your needs.

Translation: Want what we give you.

-- As it happens, we do want what this week's source, Jack Ranby, gave us: an excellent translation.

It isn't as if this is a new idea.

Rental software models are hot these days, not because customers are clamouring for them, but because software vendors want more revenue and are determined to persuade us all that this is an inescapable trend, and good for us besides.

It can be, too. More than 20 years ago the SAS Institute kept its customers very happy this way, with an annual rental fee that was maybe a quarter of what, for example, Information Builders charged for a comparable Focus licence. SAS had it figured out.

Rentals should benefit both parties. Buyers should pay lower prices (35% of the purchase price is break-even). By renting software instead of selling it, sellers benefit too, because each new sale becomes an annuity, increasing annual revenue instead of depleting the supply of future purchasers.

But we don't see any vendor propaganda promising that we'll save money by renting. Instead, we get nonsense like that spouted by Computer Associates chief executive Sanjay Kumar at Gartner's ITxpo conference in San Diego. In case you missed the press reports, Kumar extolled this exciting benefit: because your spending isn't all up front, you'll be able to switch from one vendor to another without difficulty.

Here's my suggestion: disqualify any vendor making this claim from your future software considerations on the grounds that the vendor is way, way too ignorant of IT to be trusted with anything important. When you think of a software conversion, does loss of the up-front purchase price even appear in your top 10 list of concerns?

I didn't think so. Minor matters like business re-engineering, data conversion, integration and retraining probably crowd financial friction right out of your consciousness.

Is Kumar really that dopey? Of course not. When he and his ilk make ridiculous claims like this, my guess is they're blowing smoke to try to distract you from what's really going on.

What might that be? Once you've built a piece of software into your technical architecture it's awfully hard to pull it out again. Computer Associates built its entire business on this premise, buying failing software companies at bargain prices, knowing their customers would rather pay premium maintenance fees than face the cost of a conversion.

Which means once you've decided to rent a company's software, it will be very difficult to keep that company from jacking up the fee.

Then you'll have the worst of both worlds.

Or is Lewis just paranoid? Send him an email. Lewis is president of IT Catalysts, an independent consultancy specialising in IT effectiveness and strategic alignment. Send letters for publication in Computerworld to Computerworld Letters.

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