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Software deals remade: gainsharing contracts, rent-to-own agreements, application hosting, cafeteria-style support programs dot the landscape. (Enterprise software in transition: part 2 of a 3-part series).

Article Excerpt
Much has changed in the enterprise applications market, and not just the rate of growth for vendors that a couple of years ago were posting 25 percent or better annual sales increases. The tougher climate for closing software deals is bringing sweeping changes in the way software is sold.

The standard per-seat pricing model for software--or variations on it, such as named or concurrent users--is becoming less of a standard as vendors grapple with how to price a new breed of solutions like portals, and devise models that bring them into tighter partnership with their customers. From the end-user perspective, constrained information technology (IT) budgets and a need to assure return-on-investment (ROI) on projects to senior management also is changing the type of software deals being sought.

For managers at Southwall Technologies, application hosting made sense for the business as a means of assuring speedy implementation and predictable IT costs. From the outset of its search for a new enterprise resources planning (ERP) suite, application hosting ranked near the top of the wish list for this Palo Alto, Calif.-based manufacturer of thin-film coatings--along with strong process manufacturing functionality and a vendor with financial staying power.

After an intense search that ran from March through June of 2002, the company selected the IFS Applications suite from IFS, a Chicago-based enterprise business systems provider, in July 2002. If this sounds like a company in a hurry, it is.

"Before joining Southwall Technologies, I was a consultant in the ERP arena," says Lois Cornell, Southwall's CIO. "I've seen companies struggle to implement ERP systems and understand what keeps the implementations from happening quickly....