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Vendors ranked on license flexibility, simplicity

A recent Forrester report has ranked several of the top vendors by how flexible and how simple their licensing policies are.

Frustrated with both rigid rules and complicated licensing requirements, businesses are increasingly asking their...

enterprise application vendors to remedy the situation.

Faced with those two seemingly divergent requests, some IT vendors are answering the call, according to a recent report from Cambridge, Mass.-based Forrester Research Inc.

"We assumed everyone wants flexible pricing," said Ray Wang, senior analyst. "But we talked to our clients and some said they these licenses are so complex they wish they were simplified."

Wang undertook a study of nine ERP vendors, measuring them both for their flexibility and advanced licensing metrics, as well as for simple licensing practices. While the study focused on ERP vendors, many of the companies surveyed also have CRM offerings, and there has been a cry for better licensing metrics from all enterprise applications buyers, Wang said.

Forrester evaluated Epicor Software Corp., IFS AB, Intentia International IB, Lawson Software Inc., Microsoft, Oracle Corp., QAD Inc., SAP AG and SSA Global Technologies Inc. The companies were measured on 65 criteria, using Forrester's Wave methodology.

When it came to the complex offerings, the successful vendors offered more licensing choices. For example, one oil company might want to structure its software licensing around the barrels of oil it sells, while another might want to base it on gallons pumped. Or a company might want credit for the licenses it bought with the acquisition of another company, Wang said.

"We talked to vendors who allow you to be more complex in pricing," he said. "At the heart of the model is the lifecycle. Are companies more flexible up front?"

Oracle came out ahead in the complex offering category. It's up-front licensing policies and wide choice of licensing metrics for the E-Business Suite, led to its strong showing, Wang said. Oracle was measured only on its E-Business Suite license model and not on the model of PeopleSoft or J.D. Edwards & Co., which it recently acquired.

Epicor also fared well by allowing for complexity and focusing exclusively on user-based metrics in the midmarket. QAD, which has recently introduced usage-based metrics, also did well in the complex offering category by accommodating license complexity and being up front with licensing policies, Wang said.

SAP emerged as the leader in the category of simple offerings, despite rigid software lifecycle policies.

"They simplified their pricing structure," Wang said. "It's elegant in choosing different models without a lot of up-front flexibility."

Epicor and Microsoft also placed well, thanks to a strong software lifecycle ownership experience. Oracle fared well in this category as well.

"All the vendors are really looking at their pricing strategies," Wang said. "We're getting a lot of questions from clients about pricing and pricing metrics.

"Licensing is just one pillar in the buying process, but we saw a lot of clients make a decision with a vendor and get stuck with bad licenses."

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