Anticlue

Software Licensing Fees

The wsj today details the software licensing disagreement between Fluor and SAP. (paid subscription required) The article details Fluor?s frustration over the software licenses fees supposedly required by SAP to upgrade the software version, or pay higher maintenance fees.

I don?t think this is the only case. I think the software licensing agreements need to be revisited and rethought. In today?s post dot com software economy, it is good to have innovation, but not to break the user?s piggy bank for that innovation. I also believe that the software company?s deserve profitable reimbursement for their innovation. Licensing fees are long term receivables for a software company, and can assist to cover the research and development costs of new products. However, when the three year combined licensing and support costs of software far doubles the initial cost and implementation of the product. There is a problem. Especially if the development cycle for a new product is every 18 months. Do you sustain the expense of licensing the older product now two versions behind? Do you deal with the fact that the technology is outdated, and the platform may be unsupported? Do you suffer the traumatic highs and lows of the hype cycle and stay with the newer product, incurring two cycles of implementation and upgrades in addition to support costs? No easy solution here, just a large expense, and a high risk or a high risk.