A question for those with experience in procurement

[jim2406]

Afternoon folks,

Have any of you ever seen a software licence containing a caveat that licence costs will be adjusted annually to reflect inflation?

Specifically, the situation this applies to a situation with:

- Long contracts with fixed prices and terms (5 years +)
- Enterprise software, with licences running into tens of thousands annually.

In this situation, an inflationary adjustment seems like a sensible way to protect the vendor, but I'm not sure if it's the done thing.

Thanks.

[Hawkeye]

Increases are common. Majority of suppliers I have worked with put a 5-6% increase per year in their quote instead of inflation increases. This way we knew what we were going to pay in advance plus they were offering a large discount if we purchased 5 years of licences upfront. We did not encourage the 5-6% but that was the way they worked. You need to negotiate hard to get the exact terms you want.

[XLMonkey]

Software licence agreements are full of oddities, and the exact terms will vary depending on the negotiating skills of the customer, but my experience of them is that:

- licence fee and maintenance costs tend to have fixed % increase (say, 5% increase per year). This isn't indexed (i.e. linked to changes in the inflation rate).
- support fees, if they are separate from maintenance fees, tend to be indexed (usually to RPIX plus say, 2%).

[stillooking]

Afternoon folks,

Have any of you ever seen a software licence containing a caveat that licence costs will be adjusted annually to reflect inflation?

Specifically, the situation this applies to a situation with:

- Long contracts with fixed prices and terms (5 years +)
- Enterprise software, with licences running into tens of thousands annually.

In this situation, an inflationary adjustment seems like a sensible way to protect the vendor, but I'm not sure if it's the done thing.

Thanks.

as prev messages, s/w licences are a black art, things like Oracle t&c's are quite confusing to many people. RPI linking is quite common and can be up for negotiating depending on situation/client/supplr.

[scooby]

Afternoon folks,

Have any of you ever seen a software licence containing a caveat that licence costs will be adjusted annually to reflect inflation?

Specifically, the situation this applies to a situation with:

- Long contracts with fixed prices and terms (5 years +)
- Enterprise software, with licences running into tens of thousands annually.

In this situation, an inflationary adjustment seems like a sensible way to protect the vendor, but I'm not sure if it's the done thing.

Thanks.

I've just run a software procurement for £350k per year, 5yrs. We had inflation included in this @ 4%

[Captain Lockheed]

Afternoon folks,

Have any of you ever seen a software licence containing a caveat that licence costs will be adjusted annually to reflect inflation?

Specifically, the situation this applies to a situation with:

- Long contracts with fixed prices and terms (5 years +)
- Enterprise software, with licences running into tens of thousands annually.

In this situation, an inflationary adjustment seems like a sensible way to protect the vendor, but I'm not sure if it's the done thing.

Thanks.

very common, although I've never seen one linked to the RPI - it's generally just an arbitrary figure usually around 4-5%

[Captain Lockheed]

as prev messages, s/w licences are a black art, things like Oracle t&c's are quite confusing to many people. RPI linking is quite common and can be up for negotiating depending on situation/client/supplr.

Oracle's T's&C's would win a plain English award compared to SAP's

[jim2406]

All,

Thanks for your advice, the general feedback seems to fit with my thinking.

An annual negotiation has been agreed as the route forward with a suitable increase agreeable to both parties.

Ta again.