The Cost of Staying in the Creative Game

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It’s been some time now since I’ve had to worry about such things, but today companies are faced with the declining economies all around the globe and fight for ways to save money that comes straight of their bottom line. As these companies reach out to outsourcing companies they are shifting the responsibility and requirement of software licensing onto the outsource partner. Great plan! But we are now seeing that our outsourcers are becoming more up-to-date that our own businesses…. How can this be, I mean every year our departmental heads have to submit a budget and it should come as no surprise to them the release cycles of the major software manufacturers; Adobe every 18 months, Quark around 2 years, Font software annually etc, etc. So just why are our business not up-to-date?

burning-money1Why is it we tend to find design agencies rushing out to buy the latest releases, yet our larger pre-media organizations lag so far behind – these are organizations with procurement teams and large accounts departments, departments so intent on saving money that they burn it by not planning ahead.

And why is it so few pre-media companies take advantage of the maintenance plans that the Adobe’s & Quark’s of this world offer; plans that would bring their total cost of ownership down by 50% let alone the amount administration that is then involved in writing business cases for the upgrades to justify to the board why the company needs this software. Is that not  just the price of staying in the game, the cost of supplying the key tools to the business vertical you are in?

You wouldn’t dream of not covering your enterprise solution or server based solution with maintenance that provides you with support and upgrades, so why is the desktop so different? Historically less than 10% of desktop pre-media based applications are in such a program, whereas over 80% of enterprise/server based solutions are. This is despite the cost savings companies would make in the long run.

piracyWhat’s more, there is an ever increasing volume of companies rolling out the new software across their businesses in an under licensed manner. Some companies have made this easier than others by providing license codes and media that allows them to roll out as many as they like where trust is used as the currency of compliance, whereas others have used license servers that allow for a concurrent license model (again lowering the total cost of ownership based on operational usage and not installations). Even that is not good enough and companies will flaunt the law and obtain serials or cracks off the internet – yes we all know it goes on, and it’s not an isolated problem.

Globally software privacy and the act of flaunting compliance is extremely high. An extract from the 2008 global piracy study shows just how serious the problem is, naturally this isn’t just in the business environment:

The monetary value of unlicensed software (“losses”
to software vendors) grew by more than $5.1 billion
(11 percent) to $53.0 billion from 2007 to 2008,
although half of that growth was the result of changing
exchange rates. Excluding the effect of exchange
rates, losses grew by 5 percent to $50.2 billion. The
legitimate software market grew by 14 percent.

The monetary value of unlicensed software (“losses” to software vendors) grew by more than $5.1 billion (11 percent) to $53.0 billion from 2007 to 2008, although half of that growth was the result of changing exchange rates. Excluding the effect of exchange rates, losses grew by 5 percent to $50.2 billion. The legitimate software market grew by 14 percent.

When we break that down even further to a country by country basis we can truly see the extent of the problem and how it affects individual economies.

Snap2So without wanting to sound like the voice of ‘doom and gloom’, companies should be taking responsibility by purchasing the software they use, budgeting for future upgrades and measuring the improvements they bring. It is the cost of being in the business we are in and we should respect the work that goes into the continually developing products of the software companies, not just use a search engine to find a way around the licensing protection they have used. All these companies will provide some sort of discounted prepaid upgrade path in the form of assurance plans or maintenance plans – take advantage of them by planning ahead to stay ahead!

To quote a senior designer I met over the weekend who works for a very large and famous agency:

The productivity savings alone justify the cost of performing an upgrade, why is there a need to justify it! Is it just not the cost of staying in this business?

Author: Gary George

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This work is licensed under a Creative Commons Attribution-Noncommercial 2.0 UK: England & Wales License.

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7 Responses to “The Cost of Staying in the Creative Game”

  1. Twitter Trackbacks for The cost of staying in the creative game « Tunicca Pre-Media Blog [tunicca.wordpress.com] on Topsy.com Says:

    […] The cost of staying in the creative game « Tunicca Pre-Media Blog tunicca.wordpress.com/2009/09/28/the-cost-of-staying-in-the-game – view page – cached It’s been some time now since I’ve had to worry about such things, but today companies are faced with the declining economies all around the globe and fight for ways to save money that comes… (Read more)It’s been some time now since I’ve had to worry about such things, but today companies are faced with the declining economies all around the globe and fight for ways to save money that comes straight of their bottom line. As these companies reach out to outsourcing companies they are shifting the responsibility and requirement of software licensing onto the outsource partner. Great plan! But we are now seeing our outsourcers are becoming more up-to-date that our own businesses…. How can this be, I mean every year our department heads have to submit a budget, it should come as no surprise to them the release cycles of the major software manufacturers, Adobe every 18 months, Quark around 2 years, Font software annually etc etc, so why are our business not up-to-date? (Read less) — From the page […]

  2. Charles Dostale Says:

    Upgrades to existing graphics software are at a point where the productivity gains are nominal. The productivity gains upgrading from Quark XPress 3.0 to 3.1 were much greater than the gains from 7 to 8. If you are upgrading software and not upgrading the hardware ( common ), then productivity can go down because newer software many times has higher hardware demands.

    ” You wouldn’t dream of not covering your enterprise solution or server based solution for maintenance . . . ”

    As a corollary to that, you wouldn’t dream of upgrading an enterprise or server based solution that might break existing workflows or destabilize the total computing environment.

    Design shops are generally small, and have computer infrastructure not managed professionally – computer management is done by someone with minimal experience managing computer resources.

    Pre-media companies are generally larger, and usually have staff that understands the risks involved in _any_ computer upgrade. For experienced computer professionals, an upgrade can be like a game of Russian Roulette.

    The companies you are labeling as laggards I would label as prudent and thoughtful.

    Chasd.

  3. tele2002 Says:

    Talking of higher hardware demands, do you think that this is down to lazy coding or higher programming/coding demands? I read a very good blog recently (sorry can’t remember who wrote it, I should have really saved the link) about how Microsoft and Apple are now applying better programming to their operating systems basically fixing the previously poor programming and charging us for it….

  4. Michael J Says:

    Large organizations have a very low risk profile and regular revenue streams. Small organizations have a relatively high risk profile and irregular revenue streams.

    The irony is that careful upgrades would lead to a regular growth in efficiency. But consider how many large corporations have crashed and burned because they have kept their eyes on the risk and have communication eco-systems that are not very good at evaluating the real risks involved in any decision.

    Good people making good decisions within their spheres of power. But the unintended consequences suck for the big guys. The path to getting right imho, is to revamp the communication ecosystem with the large outfits.

    Some are getting it right. Some not so much. If I were in the game, I would search for the smart companies and not waste time with the stupid ones.

  5. Scooby Says:

    unfortunately, the dumb companies make their way by charging less and the companies that hire them dont realize their “bargain” will cost them much more down the road

    • tele2002 Says:

      Hi Scooby, excellent comment, the bargain they provide companies or should have say the bargains that companies are providing is just like a slow puncture, eventually it will go flat and there will be no more savings to be made. I also believe there is a generation and understanding problem throughout, new employees at the customers are driven to reduce costs and the squeeze goes onto the suppliers.

  6. Michael J Says:

    Great point about :”eventually it will go flat and there will be no more savings to be made.”.

    I think we are looking at the destruction of business models driven by the fact that globals have reached the end of their ability to squeeze more out of old ways of doing business. To grow further they have to radically lower the cost of doing business.

    In my opinion, the good news is that it’s only when business models are demonstrably broken that there is an opportunity for real innovation in business processes.

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