There is a long history of disastrous takeovers in the software industry. The acquiring firm is not really interested in the product being required, it frequently just wants a piece of technology, user base, etc. So the product that is acquired is reduced to insignificance if not terminated entirely.
Last summer, Abacus Systems acquired Amicus Attorney. Several months later, Abacus announced that the previous licensing model (purchase + yearly maintenance) was being abandoned in favor of a Software as a Service monthly subscription model. Existing firms could maintain their current license, but would not get tech support and if they wanted to add any users, they would have to switch to the new model which would be – are you listening? – three to five times as expensive as the old model. So a firm that previously paid $4,000 a year in maintenance would now pay $12-15,000 per year.
Predictably, outrage was the response: “No way in hell am I going to pay that!”
At Legal Tech last week, I asked one of the Abacus booth representatives (previously a VP at Amicus) if he was aware of how much ill-will they had generated. “Yes” he said.
So why do it? What were they thinking? Since the reaction was predictable, one has to assume that they did some calculations and determined they would make more money by getting rid of a certain percentage of Amicus users and ripping off the rest. The math is simple. If you assign a value of “1000” to what current firms were paying, with the new pricing, lets say 50% of the users go elsewhere in disgust. So now the value of the old pricing is only “500”. But since the new pricing is at least 3 times the old pricing, Abacus is making 3 x 500, or 1,500. That is, 50% more revenue. And the revenue keeps on coming in year after year after year. So it would seem to make sense to do what Abacus did.
The thing they may not have taken into account however, is that new sales are likely to drop precipitously due to all the bad publicity. Do they seriously think any of the old users will continue to recommend Amicus? Thus Amicus will go into a long slow slide (as have other victims of takeovers such as Time Matters and PCLaw), and probably in another 4-5 years be subsumed into Abacus entirely. Maybe that was the plan from the outset.
In the meantime, what can Amicus users do? They are in between a rock and a very hard place.
There are three elements to consider when a firm is thinking about switching.
First, the cost of competing similar programs is roughly equivalent to the new Abacus pricing. So a firm is unlikely to save any significant amount of money by switching.
Second, the cost of data conversion will be substantial.
Third, the upheaval to the firm in switching to a new program will be significant: new routines, training and general disruption.
So it may in fact be cheaper to stay. Abacus is probably counting on this.
The smartest thing to do is probably to stay provisionally and start looking around in a systematic manner. Within the next 2-3 years better web-based options will almost certainly become available. That way, if you bite the bullet now, you can be in a better position to make a change in a well-thought out manner a few years from now.