Users told to expect software price hikes

Users should brace themselves for another round of software stiffing as suppliers try to make up post-millennium revenue shortfalls.

"After four quarters of poor results, a number of services and systems houses will be sorely tempted. There is a major risk of stiffing," warned Philip Virgo, secretary general of parliamentary lobby group Eurim, which is campaigning to end the practice in the industry.

"A lot of software houses haven't had a good year, and will be looking for any revenue they can get - especially those suppliers that aren't looking to move to new generations of products."

Previously users have been hit with heavy charges from suppliers when even minor changes have been made to the terms in their software licences.

In one case, a company was charged £5m, later reduced after negotiation to £3m, simply for changing its company name on the licence. Another was hit with a £500,000 bill for outsourcing its system to a third party.

Ray Titcombe, chairman of the IBM Computer Users Association (CUA), said he had heard grapevine reports that sharp practices were on the increase.

The association will meet this week to discuss the issue. "My advice to existing licence holders would be to look very closely at the terms and conditions in their contracts," he said.

Phil Payne, analyst for Isham Research, said suppliers were proving reluctant to give users any slack in their licence terms.

"They're under quite severe pressure to make revenue targets, so I would expect them to dig their heels in when they can," he said.

Eurim will this month unveil its code of conduct, which will provide guidelines as to when it is acceptable to make extra licence charges, and when it isn't. It wants suppliers and users to abide by the code.

Last month analyst Gartner accused Microsoft of exploiting confusion in its licensing conditions to generate extra revenue from its customer base. Microsoft has had comparatively poor sales figures this year, with users proving slower to adopt Windows 2000 than they did earlier Windows platforms.

First published in Computing