Inflationary pressures mean companies are facing price increases of up to 24% from technology vendors looking to recoup back margins.
The ongoing impact of COVID-19, rising inflation, according to research from ITAM Review, an independent global community for IT asset management, software asset management, and licensing professionals worldwide. , rising energy costs, and geopolitical instability were found to be accelerating software price increases. Applicable to publishers across on-premises and SaaS product lines during the 2022/2023 financial year.
In January 2023, IBM increased prices across its Passport Advantage eligible schemes, including perpetual and subscription licenses. The measure would mean a 24% hike in the UK, eurozone, Denmark, Norway, Sweden, Japan and South Africa. Canada saw a 19% increase.
Another big mover was Microsoft. The Redmond giant’s “price harmonization” efforts saw Japanese users see a 20 percent increase in on-premises software and a 15 percent increase in online services. In other regions, prices rose between 9% and 15%.
Rich Gibbons, Managing Director of ITAM Review, said: “By examining the events covered in this report and their impact on business decisions and budgets, this paper provides IT professionals, executives, and stakeholders with the tools to proactively manage IT. We aim to provide you with valuable insights to grow your wealth and maximize your return on investment.”
With spending increasing and the value customers receive not commensurately increasing, software and cloud cost management must be a C-level imperative for all organizations, the report argues.
Other vendors have also seen fit to raise prices, albeit at slower increases than IBM and Microsoft. In July 2022, Oracle increased support prices by 8% in the US and announced price increases in line with inflation in other regions. Fellow enterprise software vendor SAP announced that starting January 1, 2023, support costs will increase by 3.3%.
Another commercial issue facing technology users is M&A, the report said. “Merger and acquisition activity between software publishers can have a material impact on future transactions, so customer organizations should exercise extreme caution.
“A common tactic to quickly recover some of the acquisition costs is to focus on software non-conformance audits. Finding an organization can be considered relatively difficult, but quick in terms of generating new revenue. ”
Notable M&A in the past year include Oracle-Cerner, Tibco-Citrix, OpenText-MicroFocus, and Broadcom-VMware. Among resellers, Trustmarque acquired Livingstone. ®
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