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Software Contracts Under Scrutiny by Licensing Groups in Europe

By Michelle Amodio, TMCnet Contributor

Long-term software licensing contracts have come under scrutiny by Free ICT Europe (FIE) and the Campaign for Clear Licensing, a move that is looking to raise awareness on restrictive and business-suppressing tactics.

Representatives from each group tapped the European Parliament in September to further look into multi-year enterprise contracts given by software firms, which prohibit changes, like digitization, despite the growing change in software licensing models. What businesses are experiencing is an influx of fees or piracy fines as their need for product changes, but verboten by contract terms.  

“Due to pressures they are under, we believe traditional IT players are putting pressure on their clients, resulting in changes to terms and conditions leading to forced asset replacement. Clients are also being forced to spend a huge amount of time validating how much software they use. We believe these practices are not good for business and they waste a lot of time,” said Martin Thompson, chair of the Campaign for Clear Licensing, according to Computer Weekly.

Software contract terms can stifle use in a digital era; contract terms are becoming obsolete because of digitization, yet businesses are stuck.

“The big suppliers are trying to change the rules of engagement, forcing customers to pay for much longer,” said Tomás O’Leary, co-founder of FIE and CEO of Origina Software, reported Computer Weekly.

Businesses are reinventing how they offer services. For the enterprise, tighter budgets combined with leaner alternatives have led to the creation of software platforms for new business initiatives.

CCL (News - Alert) wrote an open letter to highlight Oracle’s risk to future earnings because of aggressive licensing.

“Customer satisfaction, relationship strength and strategic value should replace audit revenue as a key performance indicator," said the organization in the open letter.

"As more organizations mature in their governance processes, more will shy away from Oracle (News - Alert) as an unnecessary burden to manage. Oracle needs to engineer its products and license programs to reduce unnecessary risk. The focus of control needs to be placed in the hands of the business, not developers."

Software licensing is a complicated issue. There are many challenges associated with this topic, and it is up to the IT professionals to address these challenges and be cognizant of their role in keeping businesses compliant. The matter is further complicated when it’s the businesses wanting to go digital and offer digital business solutions but are trapped by restrictive software licensing contracts. IT departments  must then reconsider who they do business with, choosing to go with the companies that will support growth and offer better pricing models, one that reflects modern software use.