We launched the Vendor Pressure Index in early May. Thank you to everyone that has participated so far. In this article I want to share some preliminary insights from ITAM professionals around the world.
As a recap, the Vendor Pressure Index will track what is happening now and how the trends shift quarter by quarter. It covers three areas: how vendors apply pressure, audit behaviour, and activity around the renewal process.
Which vendors are exerting pressure
I was expecting Broadcom and Oracle. What I was not expecting was Adobe and Microsoft featuring as heavily as they have in the early results.
We mentioned in a previous article that vendors are making big bets on AI infrastructure and have to recoup that cost. The respondents to the Vendor Pressure Index are reporting that vendors are framing this push as increased productivity, enhanced security, and the opportunity to remove legacy software from the environment.
See: 20-30% Stock Drops. 30,000 Layoffs. What Enterprise Software Vendors Do Next.
Although the results are only preliminary, the renewal process is showing up as a much bigger pressure point than audit. Customers are reporting not much interaction from the vendor outside of renewal.
How the pressure is being exerted
Some of the pressure being exerted by these publishers includes the following:
Visibility tactics
- A deliberate lack of visibility on usage, such as last activity date, so the customer cannot determine their own usage and make an informed decision at renewal
- Unreasonable reporting requirements
Commercial tactics
- Price increases, upsells, AI bundles
- New product bundling with AI that is either unnecessary or unrequested
- Introducing AI features that heavily overlap with other solutions in the stack, or are not wanted
Contractual tactics
- Regular non-communicated changes to licensing or coverage
- Constant changes to licensing terms
- Penalising late renewals
Two quotes from respondents stood out:
“As more traditional SaaS companies move to consumption based models, it is getting harder to forecast demand and to govern use, partly due to vendors not providing the telemetry needed to manage this well upfront. I imagine the admin capabilities in the administrative portal for good telemetry will lag well behind the new SKU offerings.”
“Consistently seeing changes in license models and a sunsetting of legacy product SKUs at renewal time with new AI features.”
What impact is this having on the ITAM function?
The interim report is that pressure is being loaded onto the ITAM team: management overhead, ad hoc customised reporting.
Teams are having to rationalise more aggressively, as well as look at AI alternatives, because AI is being loaded into the renewal. They are trying to figure out whether they can stay on the existing platforms or look at alternatives, and they do not have enough time to migrate. They are finding the whole process costly.
And going back to the reporting and the lack of visibility on usage: how and what do we provide to end users, and what is actually being used in the environment?
Thank you and next steps
Thanks again to everyone that has participated so far. I look forward to reporting on this in future.
If you have not yet contributed, the survey is here: https://form.typeform.com/to/tv7LAhdW
Thanks, Martin
