7 ways to cut your software costs during the economic downturn

Global recession gives IT execs an opportunity to gain pricing edge on software vendors

5) Consider new types of licensing agreements

Another possibility is pushing your vendor to tweak or overhaul their software licenses for you, as in the case of Colon's retailer client. That could involve adding a cloud-based subscription option to an existing perpetual-use license, or pushing a vendor to adopt concurrent-user licensing.

Sixty-nine percent of the 78 IT managers who responded to the Acresso/SIIA survey said they preferred the concurrent-user approach over per-seat or per-processor licenses. Meanwhile, 70 percent of the vendors that were surveyed said they expected concurrent-user licensing to be one of their main pricing models by 2010.

Usage-based pricing models also may be on the rise. Altair Engineering, a maker of product life-cycle management (PLM) applications, is among the vendors that have adopted token-based, pay-per-use licensing schemes that let end users within a company share a pool of software licenses.

Tecosim, a Germany-based provider of computer-aided engineering services, has used Altair's token system for the past five years. Juergen Veith, Tecosim's managing director, said the tokens cover the use of Altair's own PLM software as well as third-party products that are integrated with it.

The token system "gives us a lot of flexibility," Veith said. "It lets us use the best software for each particular job." He also likened Altair's licensing approach to shareware policies, saying it allows Tecosim's workers to try out new products for very little cost. And the use of the tokens is saving the company money, Veith said, although he didn't disclose any hard numbers.

6) Find less expensive, nearly equivalent alternatives

Manhattan Home Finance, a mortgage lender, was locked into Lotus Notes for e-mail but desperately wanted to adopt Microsoft's SharePoint Server software for document storage and collaboration, said Nader Chahine, branch manager at the JPMorgan Chase affiliate.

Chahine found a product from Mainsoft that provides connectivity between SharePoint and Notes for US$125 per user, enabling Manhattan Home Finance to avoid a lengthy and expensive migration to an all-Microsoft stack while giving its employees all of the features they needed.

If the problem is high maintenance costs, look to a third-party support vendor, Fauscette said. Or, he added, if operational costs and systems management hassles are getting you down, consider dumping your on-premises software for Web-hosted offerings.

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