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In the ever-evolving landscape of enterprise technology, a pressing issue emerges: many organisations find their service transformation initiatives faltering, not due to technological limitations but because of outdated commercial frameworks. As CIOs grapple with the rising costs of software and increasingly complex pricing models, the result is often stagnation rather than innovation.
The Hidden Costs of Transformation
The modern enterprise faces a dual challenge: balancing the need for comprehensive software solutions with the financial implications of their adoption. Many IT leaders are caught in a bind, forced to either absorb escalating software expenses or limit usage to control costs. This dilemma leads to slower project delivery, fragmented workflows, and an inability to fully realise transformation goals.
The crux of the issue lies in what has been termed the “expansion tax”—a cost structure that penalises organisations for scaling their service management efforts. Traditional licensing models, which rely on modular pricing and per-user fees, may seem logical but ultimately inhibit the cross-functional adoption necessary for true transformation.
Why Service Transformation Stalls
As service management expands beyond the IT department into areas such as HR, finance, and security, each new integration becomes a separate procurement challenge. The consequence is a fragmented approach where each additional workflow triggers new contract negotiations and financial scrutiny. This creates a chilling effect on innovation; leaders may not lack conviction, but they hesitate to take on new financial liabilities.
When procurement dictates architectural decisions, it can stifle an organisation’s ability to innovate. By limiting access and rationing features to curb costs, companies often find themselves building workarounds rather than standardising processes. What begins as a cohesive platform strategy devolves into a disparate collection of tools tailored to individual teams, ultimately undermining the potential for an enterprise-wide service experience.
Rethinking Licensing as a Strategic Lever
CIOs must shift their focus from traditional licensing questions to understanding the behaviours that these models incentivise. If the goal is broad adoption, the commercial framework should facilitate scaling without introducing friction. It needs to support long-term planning, eliminate surprise costs, and align incentives with tangible outcomes.
This re-evaluation transforms licensing from a mere procurement detail into a strategic asset. A well-designed commercial model can either propel enterprise-wide adoption or entangle it in endless approval processes.
Innovative Approaches to Commercial Models
Some vendors are beginning to embrace new pricing structures that prioritise scalability over user counts. A prime example is Halo’s $1M Forever initiative, which caps the annual contract value at $1 million for the duration of the agreement. This innovative approach aims to eliminate hidden fees and the friction that often hampers broader adoption.
Moreover, flexible contracts that permit organisations to exit without penalty shift the focus from long-term lock-in to performance-based metrics. As Gianmarco Rubino, Product Director at Halo, articulates, “Enterprise organisations should be able to scale without licensing models getting in the way. Predictable pricing, fast deployment, and contract flexibility create the conditions for long-term transformation, not short-term compromises.”
Why it Matters
In an era where adaptability, real-time insights, and organisational cohesion are paramount, rigid licensing structures and protracted rollouts create significant barriers. A transparent and predictable commercial model empowers IT leaders to make strategic decisions without the constant burden of cost reassessment. As enterprises seek to evolve and thrive, the challenge for CIOs will extend beyond selecting the right technology to identifying a commercial framework that fosters confidence and supports sustained growth.
