Gartner Research

Counter the Threat of Hybrid Software Providers That Compete With Their Licensed IT Customers

Published: 19 November 2015

ID: G00278626

Analyst(s): Stewart Buchanan

Summary

Hybrid providers sell software as perpetual licenses to IT organizations and as service subscriptions directly to business budget holders. This research advises technology procurement how to counter hybrid providers selling services to compete with the IT organizations that licensed their software.

Table Of Contents
  • Impacts

Analysis

  • The Problem With Convergence
  • Hybrid Providers Are Driven by a Need for Regular, Recurring Annual Revenue
  • Hybrid Providers Give Incentives to Subscribe and Disincentives to Stay Perpetual
  • Hybrid Providers Are Disrupting Internal and External IT Service Offerings
  • Hybrid Providers Are Disrupting Procurement
  • Call to Action

Impacts and Recommendations

  • Technology procurement professionals will miss their chance to drive better value, when business budget holders buy directly from hybrid vendors seeking better revenue streams
    • Accidental Outsourcing Is Unlikely to Be Successful
  • When inexperienced business buyers are enticed into negotiating directly with hybrid vendors, technology procurement can negotiate more-favorable pricing and terms by intervening
  • Technology procurement professionals will optimize business value by comparing licensed software with hybrid services from the same provider
    • Hybrid Software Providers Shift the Buying Center
    • Seemingly Unfair Licensing and Pricing Practices Must Be Exposed
  • When technology procurement sources more competitive or innovative alternatives, they defeat the "alternative close" sales technique — a choice of unequal alternatives from the same vendor
    • Value Is More Important Than Price
    • Ensure Service Competitiveness

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