Undoing the dupe: A way out of your Big Software contracts

By Roger Burkhardt, CEO, Ingres

(Last month Burkhardt wrote about how Big Software companies lock customers into restrictive software licensing agreements and continue to raise prices, even during tough economic times. Here Burkhardt offers some tips for effectively renegotiating contracts with your current Big Software suppliers.)

Burkhardt tells how to untangle your company from Big Software. Photo: Ingres

For decades now many of us in corporations have been paying loads of money to work with Big Software companies like Oracle (ORCL), Microsoft (MSFT), IBM (IBM) and SAP (SAP). Our information technology employees are familiar with these software vendors and their technologies (and their proprietary licensing models) and may even identify their careers with them. So, while we may suspect we are being overcharged, and could spend millions less running our IT departments, we have remained comfortably, and expensively, locked-in.

But we want to be back in charge. And we deserve to be; we’re the customers that line the pockets of all Big Software companies. Without us, who would buy all that software?

But we question whether it is even possible to break away from this perverse reality where software leviathans dictate both economic terms and the technology road maps that are critical to our business. More

How enterprise software giants separate you from more of your company’s money

By Roger Burkhardt, CEO, Ingres

Burkhardt reveals Big Software's secrets. Photo: Ingres

Here’s how the software business really works: A software company charges your firm an enormous upfront licensing fee and locks you into escalating costs for decades to come, often using a set of hardball tactics.

But with the growing popularity of pay-as-you-go and subscription-based software and services, the old way is being exposed for the unfair financial model that it actually is. And the new open, more flexible models are starting to make the old ones look downright deceitful, especially when you show them against the backdrop of a deep recession.

Many companies have been forced to downsize to make it through these tough economic times. And as information technology and C-level executives examine the financial books together, many are discovering the unfortunate news that their Big Software contracts are harming their business’ bottom line and cannot be downsized – at least now without a fundamental change of approach.

Perhaps it’s not always intentional, but if you’re an IT decision maker with several of these licensed-based software contracts on the books, it’s very likely you’re getting duped. More

Ellison asks if Microsoft matters. Photo: Oracle

Oracle's Ellison gives the tech world a topic. Discuss among yourselves.

Does Microsoft matter? That's the question the noted Microsoft (MSFT) hater and Oracle (ORCL) CEO Larry Ellison found himself answering at a Silicon Valley event Monday night. The short answer, as Jon Fortt reported here, was yes.

The longer version of his answer on the one hand shows Ellison as the old zen master that he is, making a backhanded and self-serving swipe sound like an innocuous observation. At the same time Ellison raises a fascinating point that's worth exploring further.

First consider his comments in their entirety when asked about the relevance thing by former Sun (JAVA) president and Motorola (MOT) CEO Ed Zander.

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Strong first quarter earnings underscore the prowess of Oracle's Ellison.

Ellison is as engaged as he needs to be. Photo: Oracle

I spent most of the summer reporting and writing a feature story about Safra Catz, the enigmatic co-president of Oracle (ORCL).  I talked to oodles of people about Catz's ambitions, her value to the company, the likelihood of her becoming CEO, and her relationship with Charles Phillips, Oracle's other co-president.

All this is in the article, published in the current issue of Fortune. The conclusion is that Catz is a complicated, competent, intelligent pile-driver of an executive who makes Oracle hum.

Left explicitly unsaid in the quest to find out as much as possible about Safra Catz is just how successful her boss, Larry Ellison, has been as CEO of Oracle. This was my single greatest takeaway from my reporting.

There was a period, years ago, when Ellison became disengaged from actively running the company. Because his extracurricular activities get so much attention — the America's Cup battles, the yachts, the homes, the marriages, and so on — the world that watches Oracle from afar doesn't quite get that Ellison's era of disengagement ended a long time ago. More

On NBC's Press: Here (airing 8/23), Fortune's Jon Fortt, TechCrunch's Sarah Lacy and host Scott McGrew chat with SAP executive board member John Schwarz. For all four video segments online now, check out video on the Press: Here website. (SAP) (IBM) (ORCL) (CRM) (MSFT)

Roundtable brings together top tech executives

Before there is Brainstorm Tech (the conference) there is Infotech Forty (the forum).

Fortune senior writer Jon Fortt and I are co-chairing an intimate event for a group of high-ranking technology executives whose jobs are becoming increasingly strategic in their corporations. No longer are these chief information officers and chief technology officers the folks who make company computers and software run; they play key roles in making sure their enterprises meet financial and other goals.

Attendees include Cisco CTO Padmasree Warrior, SAP tech chief Vishal Sikka, and Albert Cheng, executive vice president, digital media for Disney's ABC group. More

IBM Software chief Steve Mills says that while Big Blue is doing more with application software, he'll be careful not to rough up his allies. Image: IBM

In a software industry defined by big egos and ruthless tactics, IBM built its empire on smart alliances. Rather than try to write every application customers needed to put their businesses on the web, Big Blue marshaled an army of allies and sold their programs in packages on top of its own. The result: A lot of successful companies – folks like PeopleSoft, Siebel Systems and Lawson – made their fortunes with IBM's help. And along the way, IBM built its own $20 billion enterprise software business into the industry leader.

Now the times seem to be forcing IBM (IBM) to tweak its friendly approach. Although the company promised to avoid offering its own programs to compete with its partners (and executives say that policy stands), some industry insiders note that the giant has begun flouting its no-compete policy as growth in its software business slows and it seeks new avenues for sales. Just look at some of the companies IBM has gobbled up recently: Cognos for business intelligence, FileNet for content management, MRO Software for asset management, to name a few. Do those qualify as applications? You bet. More

Early in the life of Hewlett-Packard, an adviser warned co-founder Dave Packard that more companies die from indigestion than starvation. The message: Be careful how you handle acquisitions.

With CEO Mark Hurd's announcement Tuesday that Hewlett-Packard (HPQ) will purchase services giant EDS (EDS) for $13.9 billion (including EDS's cash and debt), Hurd is making a bold statement that his team is operationally strong enough to handle the heartburn. More

If you thought open-source software was a threat to big-company profits, think again.

Oracle CEO Larry Ellison. Image: Oracle

Just a few years ago, the open-source software movement was a pariah among big software firms. Shai Agassi, then an executive at SAP (SAP), likened it to socialism. Microsoft CEO Steve Ballmer called it a cancer. The attitude among many in the establishment seemed to be that the “free code” revolution led by software such as Linux would discourage invention and erode profits.

That nightmare scenario hasn’t happened. Instead, the open-source movement has helped lower the cost of computing, and fueled a lot of moneymaking innovation, and not just among scrappy startups. For just one example, consider Oracle (ORCL), which is likely to highlight open-source trends as one of the growth drivers in its business when the company reports quarterly earnings today.

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Oracle CEO Larry Ellison has put the pressure on BEA management. Photo: Oracle

BEA Systems rebuffed Oracle CEO Larry Ellison's $6.66 billion hostile takeover bid by letting it expire on Sunday, but this game is far from over. BEA's management now faces more pressure, not less, to sell the business software company.

That's because the San Jose-based company has the tough task of convincing anxious shareholders that it really is worth $1.5 billion more than Ellison's Oracle (ORCL) was willing to pay. It doesn't help that BEA's stock is now trading below the $17 per share that Oracle offered, and far below the $21 per share management insists it should fetch.

BEA (BEAS) executives might not have much time to prove the company's value. Activist investor Carl Icahn, who had already bought a 13 percent stake in BEA to push for a sale, is threatening to lead a shareholder revolt against BEA's management unless they auction the company off to the highest bidder – which, so far, had been Ellison. In a letter sent Friday, Icahn was particularly critical of the rough way BEA handled Ellison's advances.

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