Some other IT users have resorted to more extreme measures?such as withholding payments to put pressure on vendors?but new legislation may soon make it harder for CIOs to employ such brute financial tactics. The uniform computer information transactions act (UCITA) makes it harder for customers to sue vendors and allows vendors to more easily change contract terms. The UCITA has already been passed in Virginia and Maryland and is under consideration in seven other states and the District of Columbia.

Fortunately, there are a host of alternative solutions on the horizon, and a growing number of CIOs are determined to make them a reality. They include renewable licensing agreements, in which CIOs purchase the right to use software for two to three years at about 85 percent of the cost of what they’d pay under a perpetual license. CIOs then have the option to renew the license at the end of the term if they’re happy with the quality of the product and the support. Subscription licensing agreements are similar to renewable licenses, except the term is shorter, lasting about a year, and CIOs rent the software, as opposed to owning it.

Finally, some CIOs are opting to circumnavigate packaged software wherever possible. They’re turning to open-source technologies such as the GNU and Linux operating systems, the Apache Web server and Sendmail e-mail. "People are not involved with [the open-source movement] for profit; they’re involved with it because they want to write good product," says Bill Lessard, coauthor of NetSlaves: True Tales of Working the Web and a former developer for Prodigy and AOL Time Warner. "If software makers see they are losing money to people going the open-source route, then they will change. Until then, it will be business as usual despite appearances."

As much as eight years ago, Patricia Wallington, president of CIO Associates and former CIO of Xerox, was envisioning a new method of buying software. "I wanted it to be like a lending library where you could find modules on the Web, buy the ones you were interested in, cobble them together and create your own software," she says. "We need to rethink the way we deliver software because it is so intransigent."

Withholding Payment: The Brute Force Option

The economics underlying the software industry?its emphasis on quarterly earnings to impress investors?leads to the pursuit of short-term profits, often at the expense of long-term gains. And this tendency has only been exacerbated by the current market downturn. The revenue of software vendors is predicated on acquiring new customers. That initial sale provides software vendors with their biggest profit. So there is a built-in incentive for vendors to rush a new release of software out the door before it is completely tested and debugged.