In the fast-evolving landscape of technology, businesses are increasingly willing to invest in shorter software contracts to explore the latest AI innovations. This trend reflects a desire to stay competitive and fully leverage emerging technologies.
A January poll conducted by IT Brew revealed that nearly half (48%) of 283 participants have signed shorter software agreements to remain aligned with state-of-the-art AI tools. Additionally, another survey indicated that 49% of 380 respondents experienced at least a 25% increase in costs for these temporary contracts.
Trial Run. Michael Hornby, CEO of tech service provider Techmentum, noted that clients are leaning towards shorter contract lengths and even monthly subscriptions for AI tools, primarily because of the uncertainty surrounding these new offerings. He likens this approach to “marrying someone before you date them,” emphasizing the unpredictability of what companies are committing to.
Regarding the increased costs, Hornby mentioned that for many companies, these price hikes are not as shocking compared to other IT expenditures. Moreover, the potential benefits of these investments may justify the higher upfront costs.
“What they’re buying when they pay a premium for monthly access is essentially an insurance policy,” he explained. “This arrangement allows them the flexibility to change products and vendors as needed.”
Testing, Testing… Natalie Glance, Chief Engineering Officer at Duolingo, indicated in August that the landscape of coding tools is rapidly evolving, with new options captivating employees. For instance, when Claude Code was introduced, Duolingo expedited its security review and approval processes to enable employee usage.
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“My recommendation to my team has been to shift towards six-month contracts,” Glance stated. “In the past, we used to opt for one-year agreements, but with the pace at which this industry is changing, by the time you finalize a contract, you might be eager to experiment with a different tool the following week.”
Ed Frederici, CTO of Appfire, echoed this sentiment, expressing to IT Brew late last year that tying oneself to a single AI tool carries significant risk since “tomorrow, something better might emerge.” This shifting landscape has encouraged him to embrace shorter software contracts.
“I consciously accept a slightly higher price in exchange for flexibility so I don’t end up wasting money in the long run,” he shared.
What’s an IT Pro to Do? For organizations exploring AI solutions, Hornby advises opting for the shortest possible contracts initially, eventually transitioning to longer agreements once the tool proves to be a good match.
“Once you’re confident that you’ve found the right tool, then commit to a longer contract to save money,” Hornby recommended. “However, don’t rush into this step until you’re entirely sure, as we’ve observed high cancellation rates for these tools, which could lead you to pay for something you don’t utilize.”
