Software Pricing Frustrates and ...

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January 09, 2006 (Computerworld) --

Ed Chapman, managing director of VizQuest Ventures LLC

... infuriates IT buyers. Jim Geisman, president of MarketShare Inc. in Wayland, Mass., argues that users and vendors are at odds over product pricing strategies. "Vendors have a narrow view of a product," he says. "They see features and functions, but there's more that goes with it, like reliability and, of course, pricing." Geisman, whose company advises vendors on how much to charge for a product or service, says IT buyers "are tired of the existing pricing model." That's because vendors make it tough for corporate users to compare one vendor's offering with another's in terms of price, he claims. Without comparable pricing models to consider when buying software, Geisman says, "it's as if it were a car without a speedometer. You don't really know the value." Utility pricing holds some hope for the future, he says. But for now, he quips, "it's like teenage sex: Everyone's talking about it, but no one's doing it and no one's good at it."
Ed Chapman, managing director of VizQuest Ventures LLC in Waltham, Mass., says there are a few things CIOs can do to mitigate the vagaries of vendor pricing models. First, he suggests, demand to see a three-to-five-year total cost of ownership analysis. "That helps even things out between competing pricing models," Chapman says. You can also put money in escrow for software that can be released to your vendor over time as total cost of ownership, performance or other metrics are reached. Chapman, whose firm sells tools designed to help monitor and improve the performance of sales forces, says he agrees with Geisman that vendors "need to transform their pricing models."
The cost-reduction mentality of CFOs ...
... can stifle IT's contribution to business growth. The adherents to that point of view include Scott Gnau, vice president and general manager of research and development at NCR Corp.'s Teradata division in Dayton, Ohio. Gnau says he worries that because so many CIOs report to chief financial officers "who only know how to take out costs," it's tough for top IT executives to spearhead the deployment of new business analysis tools that can help fuel growth. "How do you invest in the IT infrastructure and the analytics," Gnau wonders, "without having a cost take-out component?" It's not easy, so many business managers may go around the CFO-bound CIO and try to do it themselves, he says. That's a mistake, because a CIO is more likely to get it right, while, say, the marketing department is likely to duplicate infrastructure work and be less successful without IT's help, Gnau argues. He notes that many CFOs have their IT underlings "committed to keep the lights on," leaving them able to spend only "a fraction of their time devoted to new, creative technology." One possible strategy that Gnau suggests is for CIOs to form alliances with sales and marketing executives on IT initiatives to thwart skinflint CFOs. Although that's a risky career strategy, it may be the best one for the business.

Peter Mojica, vice president of product management at Rutherford

However, CFOs do want you to ...
... invest in compliance tools. That's to help keep them out of jail, of course. But indexing and archiving every possible scrap of data that later may need to be audited for compliance with the Sarbanes-Oxley Act and U.S. Securities and Exchange Commission regulations isn't easy. Peter Mojica, vice president of product management at Rutherford, N.J.-based AXS-One Inc., claims that his company's namesake compliance management software can archive up to 1TB of data every 24 hours with full-text indexing. He says you can set rules to index critical data in real time, while the rest of your information can be stamped for indexing off-line over time. The indexed data is stored serially and segmented by time periods for easy retrieval. Currently, AXS-One's software runs on Windows and Solaris servers. By Q3 of this year, the full product will also be available on Linux systems, Mojica says. Pricing is implementation-specific.

iStora saves users from "doing a science experiment," says Breece Hill's Robert Schaefer.

All-in-one storage packs backup ...
... tools with dual-CPU server. Breece Hill LLC in Louisville, Colo., sells its iStora G3 system with a 10-tape autoloader for up to 4TB of archived data, eight 400MB RAID disks, redundant power supplies and a full Intel-based server with dual Xeon or Pentium 4 processors. CEO Robert Schaefer says that rolling everything into an integrated machine instead of trying to tie together disparate hardware "eliminates doing a science experiment on the customer floor." Schaefer claims that the G3 system is ideal for midsize companies as well as large branch offices that need to archive data locally. By year's end, it will sport 500GB drives, he says. Prices start at $23,000.

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