Negotiations with Computer Associates International Inc. have eliminated duplicate software licensing fees for Citicorp, PNC Financial Corp., and State Street Boston Corp.
Citicorp said last week that its new licensing agreement covers all operations worldwide and would include future development.
One analyst estimated that Citicorp, by consolidating all its software licensing from Computer Associates into a flat-fee agreement, would save about 10% annually. As the largest U.S. bank, Citicorp pays millions of dollars annually for software.
Citicorp declined to say how much it would save.
A Breakthrough
Citicorp, PNC, and State Street Boston are among the first big customers of information technology to sign so-called enterprisewide software licenses that allow movement of programs from one site or one type of computer system to another without incurring new fees.
Until now, higher fees have been charged for software running on a mainframe than for software running on a midrange or personal computer.
This tiered pricing has been a source of consternation for technology customers over the years. And Computer Associates came under particular attack, since it holds the biggest market share of mainframe software licensing.
Flexibility on the Agenda
The problem has grown acute as big banks move software applications off the mainframe to networks of personal computers, or conversely, as they consolidate software from many acquisitions into a single data center.
"This permits Citicorp the flexibility to move forward" with plans to restructure technology without massive overheard," said Colin Crook, senior technology officer.
Under terms of the agreement, Citicorp can move software from one hardware platform to another, and one site to another.
Computer Associates will be privy to Citicorp's technology plans corporate-wide, as the bank moves toward a more distributed, client/server architecture, according to Mr. Crook.
|Greater Negotiating Power'
"Citicorp benefits by having greater negotiating power with CA," said Shaku Atre, president of Atre Inc., a software consulting firm based in Rye, N.Y.
The agreements with the banks "clean up old usage issues," said Charles B. Wang, chairman and chief executive of Computer Associates, based in Islandia, N.Y.
Mr. Wang said his firm will announce within the next two weeks a new pricing structure along the lines of the agreements with Citicorp and other banks, based on the principle of a flat fee for an entire company.
But Mr. Wang said that the new pricing structure would have no effect on Computer Associates' lawsuits against Electronic Data Systems and First Fidelity Bancorp. He said those suits involved intellectual property rights. Computer Associates sued the companies over transfers of software when First Fidelity first acquired banks, and then outsourced operations to EDS.
