The Options on Options

Software compensation has changed. Vendors must consider new factors in order to create a motivational and financially rewarding incentive plan for their employees.

By Alan Miegel, Salary.com

Options are dead — or are they?

The FASB ruling, which took effect this year, dampened on a time-honored technology tradition: providing employees with stock options as a long-term compensation vehicle. Since companies have been mandated to expense stock options, many organizations are scrambling to provide competitive plans to their workforce while still aligning the employee’s and the organization’s goals.

While stock option grants may have declined they have not disappeared. Options remain a compelling and cost-effective long-term incentive method for many companies. A review of the latest pay and equity trends reveals software companies should consider a variety of factors when revamping their compensation plans.

Bottom-Line Takeaways from Enterprise 2005

The executive report from the Enterprise 2005 conference is now available at the conference site. Authored in partnership with McKinsey & Company, the document presents themes from speakers and panels, findings from surveys of CEO attendees and what it all means for the software industry going forward. For more in-depth analysis of e2005 conference proceedings, read the SandHill.com Blog with posts from a variety of conference-goers.

The Future of IT Outsourcing

G.B. Prabhat of Satyam Computer Services presents a scenario in which technology solutions will only be delivered as part of larger business solutions in this week’s post to the SandHill.com Blog on Best Practices: Offshoring.

Tomorrow’s Business Model —
Another Perspective

In response to the oped from Sun’s John Loiacono ("Tomorrow’s Business Model Today,") Jeffrey Nolan of SAP Ventures urges caution in attributing silver-bullet status to open source and subscription licensing. The enterprise software industry must address some significant issues before its business model issues are resolved. Read Nolan’s point of view in this week’s post to the SandHill.com Blog on open source.

No More U.S. vs. India

Kishore Kumar R calls for a truce in comparing the US response to hurricane Katrina and India’s response to the Mumbai rains. Read his rationale in the Random Musings topic on the SandHill.com Blog.

Share your insight on the software business. Email editor@sandhill.com with your submissions to the SandHill.com Blog.

Poll: IT Headcount Rebounding?

A new study finds 16 percent of CIOs plan to increase their full-time staff in the fourth quarter — the largest gain since 2002. Are your clients expanding their IT operations?
Take our Pulse Poll >>

Last week, SandHill.com visitors gave their opinions on whether their company plans to increase or decrease outsourcing activities next year.
Give your opinion and see the perspective of SandHill.com visitors >>

Don’t Miss SoftSummit 2005:
Software Pricing, Purchasing and Management

Join thought leaders from the world’s largest software companies and enterprise IT organizations at SoftSummit, at the Westin Santa Clara on Oct. 10-11, 2005. SoftSummit is a unique conference, where executives discuss and debate trends, best practices and strategies for software pricing, purchasing and licensing. Hear from top executives from Microsoft, McKinsey & Co., IBM, Sun Microsystems, Symantec and many others speaking on key pricing issues such as utility pricing, grid computing, SaaS, on-demand computing and other best practices. Register today for the best price.

More at SandHill.com:

Oracle bites again! Siebel acquisitions sparks analysis frenzy.
Read the most important enterprise software industry news of the week >>

Intel Capital sends $16 million to Czech firm, Grisoft Brno.
Monitor the latest software venture capital deals >>

F5 buys Swan Labs.
Size up last week's software M&A deals >>

Browne named CEO of Nexaweb.
See who’s made it to the top in our list of recent software executive appointments >>

Send us your feedback on this newsletter and the SandHill.com site.

Parting Thought

"It is unfortunate we can't buy many business executives for what they are worth and sell them for what they think they are worth."
- Malcolm Forbes

Courtesy of Malcolm Kusher, The Kushner Group