2. An Insider’s View on Software Licensing Trends for Enterprise Applications R “Ray” Wang Senior Analyst, Enterprise Applications Forrester Research, Inc.

3. 3 Theme “Companies seek a balance between simplicity and complexity of license metrics; and rigidity and flexibility of licensing policies that affect the overall software lifecycle experience.”

4. 4 Agenda Market Forces The Software Life Cycle Enterprises Trends Licensing Strategies Software Licensing Trends Recommendations Questions and Answers

5. 5 Market Forces

6. 6 Consolidating vendor market reduces choices Instance consolidation creates reliance on vendors Existing systems require immediate modernization or replacement Improving market diminishes vendor discounts and incentives

7. 7 The Software Lifecycle

8. 8 Components Of The Software Life Cycle July 2005, Tech Choices “Enterprise Software Licensing Strategies”

9. 9 Enterprise Trends

10. 10 Enterprise Trends Existing licenses do not accommodate new licensing metrics. Business is handicapped by a lack of flexibility in licensing policy Current systems are nearing the end of their lifecycle. New licensing preferences are emerging.

11. 11 Trends in user based metrics

12. 12 Trends in user based metrics

13. 13 Trends in user based metrics

14. 14 Trends in usage based metrics

15. 15 Trends in usage based metrics

16. 16 Trends in usage based metrics

17. 17 Users dislike single named user

18. 18 Users want enterprise-wide

19. 19 Users dislike processor based metrics

20. 20 Licensing Strategies

21. 21 Strategies For The Software Life Cycle July 2005, Tech Choices “Enterprise Software Licensing Strategies”

22. 22 Software Licensing Trends

23. 23 Understand a Variety of Software Licensing Models Source: March 19, 2004 Trends “The Future Of Software Pricing”

24. 24 Average selling prices

25. 25 Typical ASP pricing and options for SMB’s List price is usually the starting point for negotiations »For 25 to 50 users: $150 to $250 / month »For 10 to 25 users: $400 to $600 / month Contract terms vary in length and options »Usually begin negotiations at 5 years »Financing options exist for lease to own with 3 to 5 year terms

26. 26 Recommendations

27. 27 Include Licensing Requirements In Your Vendor Selection Criteria Enter licensing discussions in parallel with vendor selection Understand software usage Engage verticals early to commit to delivery of vertical functionality Leverage referenceability Partner with the vendor Focus on the total cost

28. 28 Evaluate Vendors Using Some Key Criteria

29. 29 Evaluate Vendors Using Some Key Criteria

30. 30 Evaluate Vendors Using Some Key Criteria

31. 31 Selected bibliography July 26, 2005, Tech Choices “Enterprise Software Licensing Strategies” June 9, 2005, Market Overview, “ERP Applications – The Technology and Industry Battle Heats Up” April 7, 2005, Market Overview “Midsize ERP Vendors Fend Off Newcomers” April 19, 2005, Tech Choices “To Be or Not to Be Single Instance ERP”

32. 32 Questions and Answers

33. 33 R “Ray” Wang 408.327.4308 rwang@forrester.com www.forrester.com Thank you Entire contents © 2005 Forrester Research, Inc. All rights reserved.

34. 34