Software Pricing Frustrates and ...

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