Many software vendors are now embracing licencing metrics that incorporate the requirements of a virtual environment. Oracle, Microsoft and IBM are just three of the many vendors who have accepted that they have to move away from tying their software licences to physical devices or processors. Licencing software in a virtual environment based on processors can add up fast so it’s a good idea to look at negotiating software licences based on named users.  Data volume is going up fast for many organisations which in turn requires more processors, even though the number of actual users may stay the same or actually be decreasing. And one other point; Silver Bullet Associates is aware that some suppliers support contracts are not written to incorporate virtual licences and could cause a cost problem when the supplier insists the client revert the support contract from virtual to physical licenses before addressing the original issue.

Mirosoft Windows 7, due to ship on 22 October 2009, has received good reviews as the Operating System that Vista should have been. And it would appear that the large percentage of businesses that have held onto XP rather than go to Vista are no doubt planning to migrate to Windows 7. But Microsoft may be making it harder and costlier for them to do so. Under Microsoft’s planned enterprise licensing rules, businesses that buy PCs before 23 April, 2010, with Windows 7 preinstalled can downgrade them to Windows XP, then later upgrade them to Windows 7 when they’re ready to migrate their users. But PCs bought on or after 23 April 2010 can only be downgraded to Vista which will be of no help for XP-based organizations and could cause major headaches and add more costs to the Windows 7 migration effort.

Microsoft laid off 3,000 workers last week in the second wave of a major reduction announced in January. And in a memo to employees, CEO Steve Ballmer said more cuts are possible.  “As we move forward, we will continue to closely monitor the impact of the economic downturn on the company and if necessary, take further actions on our cost structure, including additional job eliminations,” Ballmer wrote. In January, Microsoft had disclosed plans to eliminate 5,000 positions, more than 5% of the 96,000 full-time workers it employed at the time. And what about Microsoft’s clients? Don’t they all have pressures on their cost structures? Wouldn’t it be a magnanimous gesture if Microsoft were to cut the cost of their products and so provide financial help to PC users across the World?

Oracle Corporation is to buy Sun Microsystems in a deal worth $7.4 billion. The deal comes a fortnight after talks between IBM and Sun collapsed, following IBM’s decision to significantly lower its offer. It will give Oracle access to Sun’s strategically important Java and Solaris technologies, which underpin the Oracle database. Negotiation tip: Try to spread your spend across the new IT supplier landscape of the ‘big four’ of IBM, HP, Oracle and Microsoft to increase competition and to give your leverage at the negotiation table.

With the huge buying power wielded across the public sector, you would imagine that they always obtain the best technology, best deals and the highest discounts. So why is it that time after time, all we read about in the press is how wasteful IT spending is in the public sector? One issue is that the public sector seems to be very conservative when it comes to buying technology. As a result it often buys technology that is already going out of fashion in the private sector, or it seems to wait an age to adopt new technological advances (such as open source software) which can drive down costs and improve productivity. For example, it would be an interesting exercise to see how many million of pounds the public sector could save if it was simply to move from Microsoft Office to OpenOffice? Being risk averse can be a costly road to follow if you get stuck with out-dated legacy solutions with expensive pricing mechanisms and un-breakable multi-year commitments.

One of Silver Bullet Associates’ clients was asking me the other day whether I knew of any readily available sources of finance that could help them fund some business critical IT projects. When I suggested he ask his IT vendors to help fund things, he looked at me as if I had grown a second head. So I explained to him that the big IT companies have always hoarded cash on a huge scale. Today, Cisco is sitting on $26bn in cash and short term investments while Microsoft has over $20bn and Oracle has over $10bn in their respective current accounts. In an era when capital markets have dried up and banks are loathe to lend, businesses are finding it hard to fund initiatives. IT vendors are acutely aware of this, and some of them are starting to bankroll their customers purchases. They may not be drawing on their cash mountains directly, but they are using their AAA credit status to enable customers to defer payments or spread payments over 2 or 3 years at minium or zero cost. In the past few months, we’ve seen Microsoft, HP, SAP and others offer 0% financing to some clients to help them fund new purchases. If you have some IT projects currently on ice which you might be able to defrost with some creative vendor financing, then it’s worth you asking your IT vendors what they can do for you!