Microsoft Create a Big Chill
Storm clouds build for providers and software vendors as Microsoft plans change of license fee pricing sending a cold chill up the back of the industryMany providers are seeing the proposed increase in price of almost 4 times the current not-for-profit rate as a money grab without any visible productivity improvement or value enhancement.
Price increased associated with any product or service is usually coupled with some form of productivity improvement or value adds which justifies a moderate price increase. These increases are sometimes indexed to reflect an increase in the cost of production. The fuel level in the airline industry is a clear example of an understandable increase in travel cost. But when an increase of around 400 percent is not explained and is presented in a ‘take it or leave it’ manner in an environment where alternatives are limited, then the big chill forming across the industry could turn technology investment into an ice age experience.
The impact of Microsoft’s initiative will create significant loss of trust between respected global giant who boasted support for the most vulnerable in our society and the aged care providers who genuinely and directly provides that support. Many providers will be shocked when they realise the extent of the increase in license costs and will wonder what in the world could possible justify such a significant increase.
Many feel betrayed and insulted at the November press release by Microsoft that questioned the integrity of some providers insinuating they had deliberately flaunted the long standing license agreement conditions to make company gains.
Once this trust is broken the winds of change will blow for many providers who will reassess their whole of business planning to ensure they are no longer held to ransom in such a manner. But the ramification for the aged care industry is far more that the increase of license fee upon an individual provider, it extends to the software vendors and their viability as dedicate suppliers of efficiencies tools created over years of engagement with providers.
The reality of the aged care technology market is such that if any vendor with a dominant position (in this case Microsoft better than 85% penetration) increases its price by such an inordinate percentage the other vendors, the majority of which have built their applications on the Microsoft platform, will not escape being impacted.
This impact will come in two ways; firstly, their prospective buyers – the aged care providers, will have a lesser amount to spend and the decision to spend will be extended as they revise their IT strategy. Secondly, the cost of their product will either rise or they will have to absorb the increased cost of production. So a best case scenario for the vendor is a slower decision making environment and an increased sell price. Worst case scenario is slower decision making, increased cost of production and fewer sales.
All sounds like the ingredients for turmoil, mayhem and ultimately consolidation.
Among this turmoil and mayhem alternative solutions will emerge and they are likely to come from the Open Source environment. This environment has matured in leaps and bounds in recent years and is now a genuine alternative for those wishing to through off the Microsoft shackles and manages their IT risk differently.
Very soon the industry will need to have a discussion about what constitutes a viable software vendor landscape and retain the variation of ideas whilst continuing to stimulate innovation and the excellence which we have come to expect from our dedicate vendors.
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