Aftermarkets are particularly important in the market of technical equipment. The downstream market for maintenance and support of both hardware and software is profitable and particularly coveted by OEM’s, often as a means to recoup their investments in research and development. In many cases these markets are contested by independent service organisations (“ISOs”), which frequently come into conflict with the manufacturers.
By Martin Thompson
Has your organization explored the secondary software market? Buying and selling used software can free up much needed IT budgets and reduce compliance and audit headaches.
Software is an asset and should be treated and managed as such, like other business assets (in certain conditions).
Click the link below for access to a comprehensive whitepaper on the risks and opportunities with secondary software.
The paper has been compiled by CIGREF, a network for large companies in France and SOFTCORNER, a marketplace for secondary software and FIE supporter.
Thank you to CIGREF and SOFTCORNER for sharing their paper.
John Deere and General Motors want to eviscerate the notion of ownership. Sure, we pay for their vehicles. But we don’t own them. Not according to their corporate lawyers, anyway.
In spectacular display of market manipulation, John Deere—the world’s largest agricultural machinery maker- told the US Copyright Office that farmers don’t own their tractors. Computer code is so embedded within modern tractors; farmers receive “an implied license for the life of the vehicle to operate the vehicle.” It’s John Deere’s tractor, folks. You’re just driving it. Or in modern software parlance ; “Tractor as a service”.
We live in a digital age, and even the physical goods we buy are complex. Copyright is impacting more people than ever before because the line between hardware and software, physical and digital has blurred. Due to the restrictive practices of manufacturers such as John Deere, farmers are now depending on the external service capabilities of original suppliers, with mechanics to be flown in at, high costs while equipment is left unavailable for days. As opposed to, for example, fixing the tractor using a tractor mechanic in the same town.
YOU BOUGHT IT, YOU OWN IT
Once we buy an object — software is also an object — we should own it. We should be able to open it, to lift the hood, unlock it, modify it, repair it or have it maintained by a third party of our choice … without asking for permission from the manufacturer.
Over the last two decades, manufacturers have used the Copyright Law to argue that buyers do not own the software underpinning the products they buy—things like smartphones, computer equipment, coffeemakers, cars, and, yes, even tractors.
Product makers don’t like other people messing with their stuff, so some manufacturers place digital locks over software. Breaking the lock, making the copy, and changing something to match your needs could be construed as a violation of copyright law.
And that’s how manufacturers turn tinkerers into “pirates”— even if said “pirates” aren’t circulating illegal copies of anything.
John Deere may be out of touch, but it’s not alone. Other corporations, including trade groups representing and nearly every major automaker. It’s worth noting Tesla Motors didn’t join automakers in this argument, even though its cars rely heavily on proprietary software.
Owners need access to repair information, replacement parts, apply security updates, maximum control to make required adjustments and freedom to decide who touches their equipment for maintenance and repair.
Free ICT Europe exists to support the owners of all ICT equipment. So let us step up to make it clear in the industry that we need a change from owner controlled ICT.
Free ICT Europe invite you to participate in an industry round table with Daniel Dalton, MEP in the morning of 22 September 2015 at Hume Brophy, Rue de la Science 41, Brussels 1040, Belgium
Removing Barriers to Third Party Support and Maintenance
Users of ICT systems find themselves in an unenviable position of having invested significantly in ICT systems and software but lacking the full ownership rights that should accompany that ownership.
Restrictive practices, such as the use of intellectual property rights by Original Equipment Manufacturers (OEM) to limit choices and the deliberately complicated software contract/licensing rules set by software publishers, limits the freedom of businesses and consumers alike to choose their providers of product, and of support and maintenance services, resulting in higher costs for European businesses.
In order to address current barriers, and facilitate a strong secondary market for ICT, it is crucial that legislators are made aware of the restrictive practices that are inhibiting the development of an open and sustainable secondary market. These practices range from fees for secondary market products sourced through OEM channels, to retrospective licensing of firmware, all of which, are equally damaging in impact.
It is of the utmost urgency that stakeholders join together to promote common standards for the reuse and resale of equipment and software as the repercussions of allowing the status quo to continue unchallenged, are likely to prove detrimental for European businesses and the European economy as a whole.
Free ICT Europe believes in a competitive secondary ICT market that supports European businesses and increases competitiveness. As drivers of ICT efficiency, independent outsource companies have a lot to gain from ensuring that there is a vibrant and successful secondary market for ICT products and services.
Free ICT Europe are bringing together stakeholders for an industry round table discussion with Daniel Dalton MEP from the Internal Market and Consumer Affairs Committee (IMCO) of the European Parliament to facilitate an exchange of views and raise industry concerns directly.
As a leading participant in this industry we would like to extend to you the opportunity to participate in this industry roundtable and communicate your concerns directly with our guest, Daniel Dalton MEP.
Who should attend:
This invite-only event is of particular interest to outsourcers, providers of third party support and maintenance services, and professions in the IT sector who are interested in open, competitive, markets to support growth in our industry.
The event shall be held at the offices of Hume Brophy, located in the heart of Brussels at 41 Rue de la Science, Bruxelles 1040, Belgium.
To confirm your participation please email: email@example.com
MEP –Daniel Dalton: Daniel Dalton is a UK MEP from the European Conservatives and Reformists Group.
A first time MEP he has established himself as a hard working and proactive member of the Internal Market with a particular interest in the ICT and information sectors.
08:15 – Welcome and breakfast
08:30 – The case for an ICT Secondary market
Free ICT Europe will explain why European companies stand to benefit from the support and development of a truly competitive secondary market for ICT support and maintenance.
08:50 – Parliament perspective. Daniel Dalton MEP
Daniel Dalton MEP will provide participants with his perspective as an MEP and member of the Internal Market Committee of the European Parliament, how politicians can support this campaign.
09:15 – Roundtable discussion.
Participants will have an opportunity to raise points of concern and discuss possible ways forward to support a competitive secondary market.
09:45 – 11:00 – Open industry forum
Participants will have an opportunity to discuss the specifics of their concerns and raise solutions to be considered by Free ICT Europe.
All participants will receive a summary report on the topics of discussion and issues raised at the roundtable.
To confirm your participation please email: firstname.lastname@example.org
Free ICT Europe (FIE) established to support industry expected to be worth €90bn, providing an additional 100,000 European jobs by 2017
A group of independent European IT services operators have announced the formation of an international alliance, established in order to champion the growth of the secondary IT market in Europe and to raise awareness of common industry issues. Free ICT Europe (FIE) represents members of the IT aftermarket. It aims to secure the right of ownership and the freedom for consumers and businesses alike to freely choose their sales, maintenance and repair providers.
The ICT secondary market is a critical source of value for European SMEs, multinational companies and publicly owned entities. Ensuring access to locally sourced ICT services and products enable organisations to extend the life and improve the service to ICT assets while realising better value. More than €10bn is saved each year by organisations operating in Europe as a result of the value and competition delivered by local European companies.
FIE works to address the restrictive and unfair practices undertaken by Original Equipment Manufacturers (OEMs), that prevent customers from having the freedom to support, repair and resell IT equipment and software.
Mainly composed of independent SMEs and representing over 50,000 European jobs in a market worth €30bn, the secondary IT market is characterized by a highly skilled European based workforce, serving local businesses. With the emergence of a software secondary market, the potential growth of this sector is expected to be worth €90bn and an additional 100,000 European jobs by 2017.
Christina Van Oostrum, President of Free ICT Europe commented, “FIE was formed in light of the challenges faced by our customers, and we are proud to provide a united voice for the industry to address the uncompetitive activities of OEMs. Their opaque practices lead to significant economic, social and environmental consequences for customers and Europe as a whole.”
“Above all, we want to ensure the provision of a local, reliable service to customers that represents value for money. FIE will work to safeguard the existence of the valuable European ICT secondary market by championing transparency, consumer rights, and the freedom of choice to support, repair and resell.”
In his blog called “Is the Cloud all huff and puff? IBM and Oracle certainly hope so!“, John O’Shea shares his views on the question: Is the cloud purely for nice-to-have niche or new applications, but not for legacy, mission-critical functions?
How do you look at the Strategy of these Giants with running business models and shareholders expectations? Please follow the analysis of John here!
Though they’re gone through a number of iterations I’ve read these words so many times it feels as if they are scorched onto my retina; IBM’s much vaunted reason for doing precisely what they please, when they please. You’ll find it on any documentation or emails or notices relating to microcode restrictions, as if it magically underpins all the other words around it & gives those other words authority. But what does it actually mean?
Well in its very simplest terms it means that you can never trust what IBM tell you because what they tell you today may very well be true today, but it might not be tomorrow. When you stop & think about that for a moment, it’s seems almost unbelievable that any company or organisation would be so bold about such a policy & openly advertise the fact. Yes, we all know that companies change the way they do things for their own benefit & organisations can spin their words to retrospectively match their deeds, just think of a politician if you need convincing. But I wonder how far a political party would get if their manifesto included the words “we reserve the right to go back on everything we told you before the election & do something completely different after it, which will be to the benefit of us & not you”; not very far I bet & yet, that is basically the message that IBM are openly advertising.
I can only think of a couple of reasons why anyone at IBM would think such a statement is ok, one pretty sinister & the other almost makes me feel sorry for them (I did say almost).
The first is a stark yet simple one, & that is IBM hold in contempt every other body they have dealings with; that’s employees, customers, governments, every one. Don’t forget that many of IBM’s big revenues come from government contracts paid for by taxpayers, so that list of contempt includes the ordinary taxpaying citizen of every country in which they operate. How can anyone within IBM think that this is a satisfactory state of affairs? Well it seems a company once obsessed with its public image now simply doesn’t care how it’s seen, from the benevolent to malevolent with fifteen little words, only interested in squeezing as much out of everything it touches no matter what the long term cost.
The second came to me whilst listening to a debate on the radio regarding the price of Premiership football tickets; one participant said something on the lines of “any club that relies solely on the loyalty of their fans, that uses & abuses that loyalty, will ultimately fail”. Replace club with IBM & fan with customer & the end result will be the same, it may be a long one but IBM is on the road of terminal decline; the once greatest computer company in the world strangled by its own greed & it’s that which saddens me.
The words themselves do beg the question that if IBM has the right to do what they are doing then why do those rights need reserving, why don’t they just get on with it? The answer to that is simple, it’s legalistic claptrap meant to sound menacing & give the words an air of legality. Of course I’m not saying that IBM can’t do this or that it’s illegal, a company can do pretty much what it wants; but just saying it does not necessarily make the changes to policy & procedure themselves legal; similarly if a customer chose to ignore the policy & procedure changes that of itself is not necessarily illegal either. In both cases that would be down to a judicial decision which would need a customer to legally challenge the changes, an occurrence that IBM are probably safe in betting against anyone being bold enough to do.
Now I am no lawyer but where I do think it’s very dubious is when IBM tries to enforce their policy & procedure changes retrospectively. Surely when a customer buys something from a supplier, that transaction is a contract & as such comes with obligations from both parties for as long as the something is in use. I think the very least any purchaser of a something has a right to expect is that the terms & everything that those terms implied remain in effect for the lifetime of the something. Altering policies & procedures that materially change the contract of purchase has, in my view, to be illegal; & if it’s not then it should be!
Having said that I suppose if an organisation signed up to the statement they would be bound into allowing IBM to whatever, whenever they wanted but who would knowingly sign up to such a thing & where would they sign? Well thinking of the fundamental nature of the effect this statement would have on the way two organisations deal with each other that this would be an elementary clause in any contract that governed their relationship; there is such a contract between IBM & all of its customers called the IBM Customer Agreement (ICA) & it’s where you would expect to find it, but I can’t & I’ve looked very hard.
So where does all this leave us? As someone that works in the IT Secondary Market I could be forgiven for thinking that IBM were out to get me & my livelihood, but it’s not deliberate, it’s merely a side effect of a company that’s lost its way & is floundering in a market it doesn’t understand anymore; most IBM customers I speak too feel even more strongly than I that IBM is out to get them by tying their hands & removing their freedom of choice but again it’s not deliberate, it’s another side effect of a company that has forgotten who is King in the supplier/customer relationship. It’s probably best summed up by the words of Napoleon Bonaparte “never attribute to malice what can easily be accounted for by incompetence”………..how very apt Mr B.
Once upon a time it was always sunny in summer, it always snowed at Christmas & the world revolved at a much slower pace, whilst the former two maybe views from the rose tinted spectacles of age, the latter is undoubtedly true. Was the world a better place then or not I really couldn’t say, but the now ubiquitous appetite for instant gratification & desire for short term gain surely has a detrimental effect on the transition of time for all of us; whatever happened to the simple pleasure to be had in waiting for something to arrive, or the heightened pleasure to be got out of it when it did? That short termism is bad for the individual psyche is a purely personal viewpoint & moot, however in terms of the businesses that affect all our lives it’s a curse that if left unchecked will blight future generations in an unending cycle of jam today with no bread to spread it on tomorrow, with bust following boom as sure as night follows day.
It seems that long gone are the days when business cycles were measured in years, when the long term stability of an organisation was far more important than any short term outlook. The annual announcing of a company’s figures so that the shareholders could see the basis on which their dividends had been worked out has always been, but recent history seems to show that share value is now far more important than dividends. The problem with using share value as the measure of success is that they are far more prone to vagaries in a market or short term influences & can be kept artificially high; to compound the problem we’ve gone from annual reporting, to quarterly reporting to what is now almost a daily picture of a company’s share value which can then wrongly be translated as a measure of its success. The obsession with keeping it high will almost naturally lead to practises that in the short term do indeed meet their given objective, but without thought of the possible long term consequences lead to disasters that affect all of us, sometimes for a very long time. The epitome of short termism are some of the events in the lead up to the austere times we’re all living through now; I mean, who in their right mind would have thought it was a good idea to lend money to people in the sure knowledge that it would not/could not be paid back? To then bundle up these loans into packets of thousands of borrowers & move these packets around the world for different banks to use as security to borrow more money from other banks they could then lend to more people that had no prospect of ever paying it back; to most of us this would seem like lunacy. But the goal of short termism was achieved & the shareholders were happy. It’s easy to say with hindsight that anyone that was involved in these practises that didn’t realise one day the tally man would come knocking & the debts would be called in must have been an idiot; & anyone involved that did realise that this would be the case, yet continued regardless, must have been a criminal, though when it really boils down to it, the vast majority of us benefitted from the excesses, drunk on the prospect of cheap & easy mortgages, even those that were in a position to stop it didn’t. We were all taken in either wittingly or otherwise for which we all now have the hangover, even those once happy shareholders. I hasten to add that this is not meant as a Banker Bash so I use this only as a clear example of which we are all familiar as to where short termism can lead & invariably does.
But there is another way, & maybe the winds of change are beginning to whisper, although quietly for now, in the circles where change can really happen. Progressive Procurement Departments are beginning to look further than just the bottom line of companies they award business to. Government Departments are being instructed to award contracts to Small to Medium Enterprises who are less likely to be shackled by hoards of baying shareholders; though I fear that one of the greatest challenges of Government is their inability to write Tenders that don’t almost instantly preclude the very SMEs they are wanting to recruit from responding to the Tenders, but at least the thought is there; maybe one day they’ll get it right. Naturally any organisation that awards business to another, needs to know that the company they are awarding to is financially sound, but questions in tenders on the subjects of cost cutting & redundancies are becoming more common, suggesting that long term soundness is taking precedence over short term appearance. But there’s more; questions on how a company interacts with its local & greater society are beginning to appear in tenders; questions on a company’s ecoego seem to be taking on a more important role in the awarding of business. Now I’m no fool & I do realise that a lot of this may just be box ticking for the time being, but I do hope that one day it will be realised that a combination of these three fundamentals will prove that a company with long term goals & a long term perspective is a far better proposition for society in general than a company whose only fixation is that of Share Holder Value. The basics for a company to truly become progressive can be encapsulated into the principles of the Triple Bottom Line, with a wider adherence to these principles bringing, may be not an end to short termism, at least smoothing out some of the troughs & peaks. I’m not going to repeat Gordon Brown’s claims of bringing an end to Boom & Bust, but maybe in future it might just be Fizzle & Just a Little Bit Broken (but don’t worry, it’s easily fixed).
So, the first principle of the Triple Bottom Line is that of Social Responsibility & for me the fundamental obligation of any company that claims to be responsible to the society in which it works is to pay the correct amount of tax in whatever country it conducts its business. It’s very convenient to forget that the people within a country that buy a company’s product are the customers that produce its profits within that country, & with that comes a duty to pay taxes back to those people, but I’m afraid forgetfulness is not really a defence in the avoidance of tax. How many times have you heard that tax avoidance is within the law? But again for me that’s no defence. There are many things that the law allows me to do but, for whatever reason I choose not to, it’s my choice as it is likewise with the tax avoiders; because the law says they can it doesn’t mean they have to, it’s their choice. It is a conscious decision & they choose not to pay tax to those they owe it to, it doesn’t just happen. Any company that claims Social Responsibility & then avoids paying tax in that society is deluding itself, its customers, or both. Whilst for me, the payment of tax is a fundamental, real Social Responsibility has a far deeper reach than just that & begins with the welfare of a company’s employees. These days I think it’s taken as read that a worker is paid a fair days pay for a fair days work, but it seems that organisations that really take in to account the well being of their workers are still few & far between; a happy worker is a good worker is an adage that appears to be lost in the mists of time but can be so easily resurrected with just a little thought plus a little expenditure. Then there’s a responsibility to the local area in which a company is based & where the majority of its employees will live. By using local companies wherever possible, not just based on price, & by sourcing from local producers wherever possible, the local economy will improve & exponentially increase the well being of a company’s employees as this creates greater opportunities for husbands/wives/children to gain employment in the local community in an almost self fulfilling cycle. Supporting local organisations, both charitable & business, is the true mark of a socially responsible company.
The second principle of the Triple Bottom Line is the traditional one, that of profit; now profit is not a dirty word, profit is good as without profit a company cannot do all the other things that make it into a truly successful company. However, the problem with short term profits is that they become the singular goal with all other considerations ignored. How many times do we see companies cutting costs, which usually means the loss of people’s jobs, just because their profits are down? They’re still making a profit just not as much as they were, or as much as they’re shareholders expect. Even the great behemoths of our own industry would rather lose people than admit to a reduction in profits, once loyal employees become little more than faceless, collateral damage in their war to keep shareholders happy, cast adrift with no thought to the devastation unemployment can cause them & their families. Obviously there are times when companies must let people go, but when it’s done purely to prop up share value it’s wrong. So all successful companies must make a profit, but a profit that is holistic to everything else the company does & not a single end in its own right, profit built on sound, long term business practises is what we should all strive for.
There’s an odd juxtaposition with the final principle as in most respects it could be deemed as the most important in the long term, but in the extreme long term is of absolutely no consequence at all. The Golden Age in which we have lived for the past 15,000 years cannot, will not last forever; as in a poem to Ozymandias all things will come to end, however grand they were in existence & our civilisation is no exception (though that’s probably the subject of another blog!). At least with the third principle of Environmental Responsibility we do have the chance of kicking that can as far as possible down the road of inevitability & have a duty to future generations to do so. The current rate of consuming natural resources cannot go on for much longer as nothing is endless & from building infrastructure with as small an environmental impact as possible to making sure all unnecessary lights are turned off at night, businesses are in the vanguard of making sure that the generations that follow will have a world worth living in.
As I’m sure you probably realised by now, that as this blog is appearing on a Blue Chip website I believe Blue Chip to be a great exponent of the Triple Bottom Line, though whether this was an predetermined goal of the company or whether it’s just evolved over time as the right way to run a business I couldn’t say. Something I do know is that I’m proud to work for such a progressive organisation & that the feeling of self satisfaction it engenders is probably an obtuse benefit that most if not all employees feel; I doubt whether all other Blue Chip staff have sat down & thought about it in detail but rest assured they will all have benefitted to a greater or lesser extent to the Triple Bottom Line. So this is not a smoke blowing exercise no, even though it’s too big a subject to cover in a couple of thousand words the point of this blog, if indeed blogs need to have a point other than a means to while away a wet Sunday afternoon in June, is to give a glimpse in to why Blue Chip is the right kind of company to do business with. Secondly, though just as importantly, to hopefully strike a note that to have a successful company in its broadest sense it is possible or maybe even necessary to be truly successful, to look after its People, it’s Profits & its Planet.
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