November 20, 2012 – It’s a buyer’s market for enterprises and SaaS applications, though three main factors could damage your deployment plans, according to a new report from Constellation Research.
In its new best practices report, entitled “The Enterprise Cloud Buyer’s Bill of Rights: SaaS Applications,” Constellation puts 81 percent of all new enterprise software license sales with at least one cloud deployment option. That shows a business application sector “dominated” by SaaS and cloud interest and, increasingly, enterprise involvement. Along with this off-site shift, Constellation notes that the risk for vendor lock-in with application contracts increases for three prime reasons:
- Limited rights and control: Enterprises don’t own the code in most public cloud models and are “at the full mercy of the cloud vendor ... should the vendor decide to take a different product direction or find itself bankrupt."
- Ambiguous cost: As more data and connections grow by the day with a deployment, changing cloud vendors raises mounting complications with the advent of time. Migration plans across vendors or two private clouds are “unclear” due to business processes latched onto vendor functionality and varying metadata, standards and process flows.
- Waning vendor eagerness: As the cloud/SaaS are still early in enterprise adoption maturity, Constellation found that most vendors still have “customer-friendly policies.” As more businesses move to the cloud, the deals favor the vendor. “Unless rights are stated up front today, buyers will lose leverage over time,” the firm wrote in its report.
While presenting these three somewhat daunting lock-in scenarios, Constellation was quite positive in the report on enterprise cloud adoption possibilities. R “Ray” Wang, CEO and principal analyst at Constellation, wrote that among the potential for cost savings and tech upgrades, enterprise solution contracts are also being offered the “chance for a new slate.”
CIOs, CMOs, line-of-business executives and procurement managers “should ensure that the mistakes they made with on-premise licensed software aren’t blindly carried over,” Wang wrote.
Click here to register for access to the full, 54-point “bill of rights” from the firm on vendor contract negotiations.
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