<a href="http://www.computerworld.com/managementtopics/management/story/0,10801,98227,00.html">ComputerWorld</a> is reporting that businesses and government are cutting software costs by consolidating servers and purchasing fewer licenses. How does this affect the software industry?
1) IMO, this only affects mid to large businesses and government entities. The cost savings in a smaller organization is less than the cost of reorganizing the computer systems in small organizations.
2) In cutting costs, management will probably go too far. I write this easily because it happens all the time. It's easy to push things beyond the acceptable threshold of what is necessary when you can't predict what is necessary. In this case, many companies will cut the number of servers to the point where backups and redundant systems can't be maintained. The dangerous questions will be in the air again: "Why do we need these extra servers for backups? I've never noticed a system fail before! Why do we need redundant systems? Overflow? What are you talking about? Just make it work without them."
From these two points, I conclude this is an example of the "save now, pay hidden, unmeasured costs later" philosophy. The only thing that would make this different is if the increased power and reduced cost of the latest hardware technologies make it possible to have those redundant systems in place.
Regardless of that outcome, I foresee a dramatic increase in the cost of site liceneses for enterprise applications in about a year or two. Watch for it!
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