Stuck Between a Rock and a Hard Place: How to Renegotiate Software Contracts

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by | November 11, 2014


As demonstrated in the case of Rimini Street, vendors will exploit any doubt in a contract term to their benefit. Software sales is tough with an estimated $0.70 spent for every $1 earned in licensing – the reason why renegotiating contracts is so vital to the revenue of a software vendor.

Pushy vendors will happily play the audit card when they want to increase revenue, leaving customers stuck between a rock and a hard place; “Buy more licences, it’s better to be safe than sorry.” In light of this approach, purchasers frequently have to defend their licensing position.

In March this year, a court ruling stated that Rimini Street had worked contrary to the terms of Oracle’s licensing in a number of support contracts. The case was based on software misuse and focused on four Rimini Street clients, one of which was the City of Flint – the result was that software it had bought in good faith could not be hosted by a third party and that Rimini Street infringed Oracle’s copyright.

This case highlights the precarious relationship between IT buyers and software providers. “The problem was that Rimini Street and its customers thought they could copy the software onto servers at Rimini Street’s premises. Some contracts prohibit this, some don’t” stated Forrester analyst, Duncan Jones. He continued, “If you are arguing with the sales rep, you’ll always lose. But if you talk strategically, then the negotiations escalate.”

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