In our interview with Paradigm CEO John Gibson at last year’s SEG (OITJ Vol. 10 N° 10), John expressed a degree of exasperation with the industry’s growing use of license management software, ‘Companies are over-focused on license management tools like FlexLM and GlobeTrotter. They are wasting everybody’s time. The last thing the industry needs is more licensing management software!’ The announcement (page 8 of this issue) of sales of OpenIT’s LicenseAnalyzer to ConocoPhillps and Marathon suggests that the trend isn’t going to stop any time soon.
Renegotiate
For those of you who are not familiar with the practice, license management software allows a corporate user to monitor how often a software package is in use. If they have bought 100 seats for a particular package and discover that they are only using 50, then they can go back to the vendor and renegotiate. In the above circumstances, this would seem like quite a reasonable proposition. But things are not always so clear-cut. License management software is getting more sophisticated and can ‘multiplex’ licenses so that clients can better ‘align’ the number of licenses they buy with actual use.
Burger flipping
For some reason this reminds me of a story I read in the paper about a local burger chain. The manager was onto what he thought was a good idea when he decided to put his burger flippers ‘on holiday’ when demand slowed. Nobody in the shop? Take a couple of hours out of your annual leave—go for a nice walk in the park! I admit that the analogy is stretching it a bit. But taking things to the extreme, software license management is a little like asking your vendor to go on holiday between your mouse clicks. The trouble is that software companies, especially the smaller ones, are not terribly sophisticated when it comes to sales and pricing. The charges that a software house levies are at least in the early days, a kind of pact between user and developer—‘We sell you the software and charge a maintenance fee. This feeds us while we write new code and fix bugs.’ It is not an exact science but one thing is for sure, the license management systems sucks money out of the system and it is not clear who is going to pay the tab.
Skype
While preparing this month’s issue I myself spent a few hours sucking money out of another system. Using Skype and our new SkypeIn phone number in the USA means that an hour long transatlantic phone call costs either nothing or the cost of a local call. I like that. A decade ago, Frances Cairncross in her seminal article ‘The Death of Distance’ forecast the huge cost reductions that the telcos could achieve with new technology—anticipating a hundred fold reduction in prices. Well it has happened now and it feels good.
As the graph below shows, our website oilIT.com has begun the year with a bang. We currently receive around one thousand visitors per day as evaluated by our Urchin site monitor. That does not include visitors to intranet-deployed mirrors. This is up from 400 per month in 2003—the last number I can find without some serious hacking.
2005 financials
For the last few months, we have been collecting and filing company financials without ever finding the time and space to digest them for you so I’ll have a quick bash in this last column. With oil ending the year in the $65 plus range, it is unsurprising to find that Halliburton’s revenues for 2005 were ‘The best in our 86-year history,’ according to president and CEO, David Lesar. Halliburton’s Digital and Consulting Solutions’ (principally Landmark Graphics) operating income for the full year came in at $146 million (up from $60 million in 2004) and ran at a princely $66 million in the fourth quarter. Schlumberger’s Oilfield Services revenue for 2005 came in at $12.65 billion, up 24% on 2004. Operating margins improved 4.6% showing ‘high demand, strong pricing and accelerated technology delivery.’ Q4 revenues, at $3.6 billion were up 30% year-on-year.
Constraints
The only fly in the ointment is that, according to Schlumberger president Andrew Gould, offshore drilling is likely to be constrained by rig availability and that people and equipment shortages are likely to result in cost inflation and project delays. But perhaps the most interesting facet of the growth is the fact that the seismic business is finally coming out of the doldrums. Schlumberger reported revenues from its high bandwidth ‘Q’ technology at $399 million in 2005, more than doubling the $162 million achieved in 2004. A growth rate ‘higher than 80%’ is expected in 2006! If you thought data volumes were high and growing fast, you ain’t seen nothing yet!
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