Monday, January 17, 2005 - The Revolt of the Corporate Consumer

A (subscription-only) report in the Wall Street Journal,The Revolt of the Corporate Consumer claims that customers are gaining the whip hand.

"The power has shifted. For more than two decades, software vendors have been in control, selling tech-hungry companies a steady stream of new products and services largely on the vendors' terms. No longer. In the four years since the collapse in corporate technology spending, the tables gradually have turned -- to the point that now, it's the buyers who are clearly calling the shots. They are wrangling for better prices, demanding software that's more reliable and secure, and resisting software companies' push for constant -- and expensive -- upgrades."

"All this represents a seismic shift in power to tech buyers from sellers. Limited tech budgets have given chief information officers more negotiating clout with vendors, who know that many buyers already feel burned by disappointments with previous purchases. Meanwhile, open-source and subscription Web-based software services have emerged as more-serious competitors to the established software giants, putting downward pressure on prices. Combined, these trends mean that customers are demanding -- and getting -- more and better software for their money."

"'They're economic tectonic plates and they're moving,' Mitchell Kertzman, a venture capitalist with Hummer Winblad Venture Partners in San Francisco, says of the forces propelling the customer revolt. The power shift is permanent, he adds. 'There isn't any way to go back.'"

"For software companies finally being forced to improve security, simplify maintenance, reduce costs and deliver measurable business results, Mr. Kertzman says, the shift 'will be really punishing.' But customers are already reaping rewards."

The following is a box accompanying the article:


According to tech-industry experts, software buyers want suppliers to:

* Deliver software that meets the standards of other commercial products, namely that it work out of the box

* Be accountable for agreed-upon service levels develop and maintain secure products and services that place minimal burden on users

* Responsibly alert users when new vulnerabilities are detected

* Integrate security throughout the design, manufacture and upgrade cycles

* Ensure compliance with security requirements before release

* Develop more secure and less costly patch-management processes

* Test common software configurations for security vulnerabilities and bugs

* Provide innovations more specific to their business



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