Feeds

Enterprise software faces 50 per cent price hike

Gartner says talk to vendors now...

  • alert
  • submit to reddit

Build a business case: developing custom apps

Underlying technology trends could push software licenses for enterprise applications through the roof, according to Gartner.

The analysts say that licensing models used by IBM, Oracle, Sybase and other vendors which are based on hardware will increase by at least 50 per cent by 2006 unless they are renegotiated quickly. Licensing for such applications is usually based on the processing power of the box the software is installed on.

But the move to servers with more than one chip could land businesses with a big bill. If an application currently costs $40, 000 per CPU then a dual-CPU system will cost $80,000 - a 50 per cent improvement for twice as much money.

Alexa Bona, research director at Gartner, said: "The current licensing model does not give software vendors an incentive to write more efficient code. It also leaves users unable to control costs when single core systems become unavailable, perhaps as early as year-end 2006. By that time, many enterprises will pay at least 50 percent more in software fees from a number of mainstream software vendors that currently license based on CPU."

Other trends likely to push fees higher are use of virtualised hardware resources and capacity on demand machines. Virtual machines use partitioning to divide a chip up so different parts run different applications. But many vendors do not recognise this so business end up paying for using the whole chip even if they are only using a fraction of it.

Capacity on Demand systems face a similar problem. Such systems contain more processing power than a business typically needs so the extra processors can be switched on when they are needed. But again software vendors typically charge for total potential capacity rather than what is actually used.

Gartner recomends business takes urgent action because by the end of 2006 single core systems will not be available. The analysts say companies should start talking to software vendors now to get policies changed. In the longer term they call for standards that "would permit a proper long-term restructuring of software pricing". ®

Related stories

Oracle moves to quarterly patch cycle
Big.biz struggles against security threats
Microsoft spruces up Navision

Build a business case: developing custom apps

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
Microsoft says 'weird things' can happen during Windows Server 2003 migrations
Fix coming for bug that makes Kerberos croak when you run two domain controllers
Cisco says network virtualisation won't pay off everywhere
Another sign of strain in the Borg/VMware relationship?
VVOL update: Are any vendors NOT leaping into bed with VMware?
It's not yet been released but everyone thinks it's the dog's danglies
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.