Corporations using Boole and Babbage Inc.'s software should try to renegotiate their existing software license agreements to head off possible price increases, an analyst said.
That's because BMC Software Inc.'s planned purchase of Boole could lead to software price increases for certain mainframe license categories after the acquisition, according to a recent report by Meta Group Inc., a consulting firm in Stamford, Connecticut.
"The idea is to try to get as much as possible of what you liked about the old situation when negotiating a new deal," said Jim Lackey, a software configuration manager at Information Systems Management Corp. in Burnaby, British Columbia.
The company provides information technology services to the British Columbia government. Customers planning new purchases of Boole software may be in the best position to negotiate long-term price protection on all existing software licenses.
Others should quickly try to negotiate fixed-price deals on existing Boole software when they enter long-term license agreements with BMC after the merger, said Mike Egan, the Meta analyst who wrote the report.
"Either way, just don't sit back and wait for the bell to ring. ... It will ring, and it is going to keep [users] up late" if they aren't prepared for the price hikes, Egan said.
BMC Software announced plans early last month to acquire Boole for US$900 million. The merger is expected to give Boole users a broader selection of systems management software and middleware to choose from.
But BMC's reputation for higher prices, plus the blending of the two vendors' licensing models, could mean higher costs for users of Boole's mainframe software and tools.
At the British Columbia IT contractor, Lackey said he's concerned about the price-hike speculation. For the time being, the company is continuing to treat BMC and Boole as rivals -- to see if the impending merger can be leveraged to get better deals from either vendor.
"If there is in fact going to be a [price] hike after the merger, we may have to review the competitive environment" for alternative vendors, Lackey said.
"It's hard to believe that BMC is going to be able to move existing [Boole] software at much higher prices," said Robert Paceley, a senior system programmer at the Palm Beach County government in Florida.
At the same time, though, customers whose production environments are tightly tied to Boole software may have a hard time ripping out the software. "We are taking a wait-and-see attitude" to how the merger will play out, Paceley said.