Reading The Fine Print

By Jason Compton

Software licensing agreements keep getting longer, but savvy customers haven’t stopped reading them. In fact, jarred awake by high-profile license changes over the past few years and a growing concern in some circles about software licenses that curtail discussion or public benchmarking of an application, software buyers have been taking extra special care to digest the terms of the software they add to their arsenals. Some are no longer willing to take the terms of use as presented.

CIOs and technology VPs actually get together for industry lunches to swap strategies for shaving an otherwise mandatory year off a service-and-support contract or extending a renewal deadline put forth by their vendors. As technologies mature, flexibility and freedom will dictate customers’ willingness to buy, not features and pricing. Rather than getting caught flat-footed on a sales call, take another look from your customers’ perspective at your standard licensing and services contracts to spot potential trouble areas. Discuss with management and the legal department which clauses and concepts are immutable and which you have negotiating power to change. Don’t waste time fighting battles directly with legal. If you routinely hear resistance from customers on certain issues, make sure you have an advocate in management who can fight the legal battle while you smooth things over with your clients.

Joe Galvin, VP and research director at Gartner, advises caution before you even open up the terms of the license for discussion. “Situational awareness – an understanding of who it is you’re dealing with and your ability to influence the negotiation – should dictate your strategy at any given point,” he says.

Customers still need to establish their expectations and requirements for basics, such as functionality, service, and price, so be extremely wary of a prospect who opens with a broadside on your benchmarking policy – it may be a waste of your time to argue the fine print until the pens are uncapped and poised for a signature. “If these questions occur early in the sales cycle you know you’re not dealing with the decision maker. If the issues are raised in the last closing meeting they may be what will swing the deal one way or another,” says Galvin.