Sectors Software Customers 6 min read

MACRO INTELLIGENCE MEMO

TO: Enterprise Software Customers (IT Leaders, CIOs, CFOs)

FROM: Enterprise Technology Procurement Division

DATE: June 2030

RE: Renegotiating Legacy Software Contracts in an AI-Disrupted Market

EXECUTIVE SUMMARY

If you are a CIO, CFO, or IT leader responsible for software purchases at your organization, you are in an extraordinarily strong negotiating position in June 2030.

For the past 15 years, software vendors (Salesforce, Oracle, SAP, ServiceNow, etc.) dictated terms. You needed their software, they knew you needed their software, and they priced accordingly. Annual price increases were often 8-15%, and you had limited options for resistance.

That dynamic has inverted. You now have options. And the vendors know it.

This memo explains how to use your newfound leverage and what to do with your legacy software contracts.

THE SHIFT IN BARGAINING POWER

The shift in bargaining power happened remarkably quickly, between 2025 and 2027.

Before 2025: - Your organization was committed to Salesforce for CRM, or Oracle for ERP, or Workday for HR - Switching away from these platforms required a 12-18 month implementation project costing $5-20 million - The switching cost was so high that even if you were unhappy with the vendor, you would endure 8-10 more years of the relationship - Vendors knew this and priced accordingly

After 2027: - You could implement a custom CRM system using AI in 2-3 months for $200,000-500,000 - You could implement a custom ERP system in 3-4 months for $500,000-1 million - The switching cost had collapsed to perhaps 3-6 months of implementation and $200,000-1 million in total cost

From the vendor's perspective, the competitive advantage of switching to custom AI-generated software suddenly exceeded the cost of switching. The lock-in that had existed for 15 years was gone.

WHAT YOU SHOULD BE DOING NOW (JUNE 2030)

By June 2030, if you are a large enterprise software customer, you should have already:

1. Evaluated alternative software options (2026-2027) This should include: - Incumbent vendors' responses (Oracle with database focus, Salesforce with Einstein AI) - Competing vendor options (SAP, NetSuite, other horizontal vendors) - AI-native software alternatives (newly emerged, venture-backed) - Custom AI-generated software (using AI code generation to build your own)

You do not need to have switched, but you should understand what the alternatives cost, what they deliver, and what the switching process would entail.

2. Opened renegotiation conversations with your incumbent vendors (2027-2028) Most sophisticated enterprise customers did this. The conversation goes: - "We are aware that alternative solutions exist and that switching costs have declined" - "We value continuity with your platform and ecosystem" - "But we cannot justify 10%+ annual price increases in light of these alternatives" - "We would like to discuss a more competitive pricing structure"

Most vendors, when faced with this conversation, relent. They recognize that losing a major customer to a custom alternative is worse than a modest price concession.

By June 2030, many large enterprises have already achieved: - Flat pricing (no annual increases) for 1-3 years - 10-20% price reductions on renewal - Renegotiated terms around usage metrics or user counts

3. Started at least a pilot program with an alternative (2028-2029) Some organizations have actually started implementing alternatives: - A subset of a division is running a custom CRM built with AI - A subset of a division is using an AI-native competitor's product - A testing environment is being built to evaluate the switching process

These pilots serve multiple purposes: - They build internal expertise with alternatives - They provide hard data on switching cost and risk - They strengthen the negotiating position with incumbents ("We're not bluffing; we have tested switching")

THE STRATEGIC DECISION MATRIX

By June 2030, you face a strategic decision about each piece of legacy software:

OPTION 1: Stay with incumbent, negotiate harder

Rationale: - Your organization is deeply integrated with the platform (workflows, customizations, expertise) - Switching cost is real, even if lower than before - The incumbent vendor is adding AI capabilities (Einstein, Oracle AI, etc.)

Requirements to make this work: - Achieve 15-25% total cost of ownership (TCO) reduction through renegotiation - Negotiate genuine multi-year commitment (3-5 years) to lock in pricing - Require the vendor to invest in specific AI capabilities you care about - Build contingency plan for switching (maintain alternatives evaluation)

This is the safe option. Most large enterprises are choosing this for at least some of their software portfolio.

OPTION 2: Switch to a competing vendor

Rationale: - Competing vendor (SAP, Workday, ServiceNow, newer vendor) has superior pricing and capabilities - Switching cost is acceptable if TCO savings are 30%+

Requirements: - 6-12 months of careful vendor evaluation - Implementation project of 9-18 months - Internal change management (your team learns new platform) - Acceptance that you're not getting custom solutions (you're still getting packaged software)

This option works if you're genuinely unhappy with incumbent AND the alternative has materially better features or pricing.

OPTION 3: Build custom AI-generated solution

Rationale: - Implement software perfectly optimized for your specific business logic - Achieve 50%+ TCO reduction vs. incumbent - Build unique competitive advantage (software tailored to your specific processes)

Requirements: - $200,000-1 million in initial implementation cost (depending on complexity) - Internal software development capability or partnership with vendor - Ongoing support and maintenance (bug fixes, upgrades, AI-driven improvements) - Acceptance of transition risk (new system might fail; contingency plan required)

This option works if: - You have specific business processes that require customization - You have internal technical capability to manage the system - The savings justify the risk

THE SPECIFIC RENEGOTIATION PLAYBOOK

If you choose Option 1 (stay with incumbent but renegotiate), here's the playbook:

Step 1: Baseline data (Q2-Q3 2030) - Audit your current contract (what are you paying? for what?) - Calculate TCO including implementation, support, customization - Benchmark against market alternatives (what would competitors cost?) - Identify pain points with current vendor (what would you want to change?)

Step 2: Internal alignment (Q3 2030) - Get executive alignment (CFO, CEO) that renegotiation is a priority - Identify your walk-away point (what terms would make you switch?) - Decide how aggressive you want to be (15% TCO reduction? 25%?)

Step 3: Engage the vendor (Q4 2030 or Q1 2031) - Request a business review with the vendor (not the sales team, the customer success team + account executive) - Present your analysis (market alternatives, your internal needs, financial pressure) - Request a revised proposal that addresses your concerns - Expect initial resistance; vendors will claim they cannot offer concessions

Step 4: Apply pressure (Q1 2031) - Escalate internally at vendor (contact the Chief Customer Officer if necessary) - Highlight your pilot of alternative solutions ("We're not bluffing") - Request specific concessions: - Price reduction (10-20%) - Multi-year commitment (3-5 years) at locked-in pricing - Specific feature/capability commitment (AI features you care about) - Enhanced support SLAs

Step 5: Negotiation/close (Q1-Q2 2031) - Negotiate on terms - Likely outcome: vendor agrees to 10-15% price reduction + multi-year commitment - Document in writing with clear terms

THE VERDICT ON LEGACY SOFTWARE (JUNE 2030)

Let me be direct about what legacy software vendors can realistically offer in June 2030:

What they CAN offer: - Pricing parity with 2023 levels (flat pricing, no annual increases) - 10-15% price reductions from 2023 peak pricing - Multi-year commitment at locked rates - Enhanced support and SLA guarantees

What they CANNOT offer: - The quality/customization of AI-generated custom software - The cost structure of custom solutions (packaged software is inherently higher-margin) - Complete feature parity with newer AI-native competitors - The innovation velocity of venture-backed startups

Realistic enterprise software landscape (2030): - Large enterprises will maintain Salesforce/Oracle/SAP for core platforms (renegotiated at lower cost) - Large enterprises will add AI-native solutions for specific use cases (inference, custom logic) - Mid-market enterprises will partially switch to custom AI-generated solutions - Small companies will use AI-native or custom solutions exclusively

THE ROLE OF OPEN SOURCE & SELF-HOSTED

One additional dynamic worth noting: open source software has gained renewed competitive importance.

In 2015-2023, the narrative was that open source was a commodity and that SaaS vendors (with superior UX, integration, and support) would dominate. This narrative was correct.

But by June 2030, open source databases (PostgreSQL, MongoDB alternatives), open source analytics platforms, and open source AI development tools are increasingly competitive alternatives to proprietary SaaS. If you have internal technical capability, you can often: - Deploy open source software on your own infrastructure - Add custom AI-driven features using AI agents - Achieve lower TCO than SaaS alternatives

This is not for every organization, but it is a viable alternative for tech-forward companies.

FINAL RECOMMENDATIONS

By June 2030, my recommendations for enterprise software customers:

Use your leverage: You have leverage you did not have in 2023. Use it to renegotiate legacy contracts.
Target 15-25% TCO reduction: This is achievable and reasonable. Hold vendors to it.
Negotiate multi-year deals: Lock in pricing for 3-5 years once you renegotiate.
Pilot alternatives: At least one pilot of an alternative solution (competitor or custom AI). This keeps your options real.
Build internal AI capability: Whether you stay with incumbents or switch, you need internal expertise in using AI effectively. Invest in this.
Accept the portfolio approach: You will not have a single unified software platform. You will have core platforms (Salesforce, Oracle) complemented by specialized solutions (custom AI, AI-native, point solutions).

This is messier than the pre-2025 paradigm of "one vendor for everything," but it is the reality you now operate in. Embrace the portfolio approach and optimize it accordingly.

The power is in your hands. Use it.