Difficult economic times and the increasing number of software models have all led to the power of negotiation shifting more towards the customer. While this may be a great thing for you, there are also some complications in the sense of options and the process of buying. The decision makers have to work harder than ever in order to get a good software.
Smart managers nowadays, however, save a lot of money. Instead of constantly accepting the old model and terms, they are now looking for better deals. Some customers are threatening that they will find other options like SaaS, open source and so on.
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- 1 This is why you could use some knowledge on negotiating with vendors.
- 1.1 Don’t go for “buy now and save” offers
- 1.2 Ask about rebundling protections
- 1.3 Don’t reduce the number of licenses
- 1.4 Always negotiate as an enterprise
- 1.5 Talk to analysts
- 1.6 Price doesn’t mean value
- 1.7 Don’t make a decision based on your personal preferences
- 1.8 Best cost reduction practices
- 1.9 It’s Your Time To Negotiate
While companies were always able to discuss the price based on larger and longer term commitment, now they have the opportunity to be flexible, have multiple choices and more transparency.
Vendors are also being more transparent about the choices they offer to their customers and using them as marketing strategies.
Maintenance is also a field where the customers are starting to push for better deals. However, the vendors are still holding a hard bargain.
This is why you could use some knowledge on negotiating with vendors.
Here is how to do that:
Don’t go for “buy now and save” offers
Vendors often offer these at the end of the quarter or at the end of the year. They entice the customers to buy this software before it’s time to buy it in order to get the money from paying maintenance and support fees. Don’t fall for this deal, even though it might seem compelling but you’ll actually save more money by just buying your software when it’s the right time.
Ask about rebundling protections
Rebundling protections can ensure that you can keep all of your functionality and add-ons even after the suite or the platform gets repackaged, unbundled or bundled.
Don’t reduce the number of licenses
This is what customers often do when they experience a decrease in the number of users but it’s a mistake that they shouldn’t make. For instance, Baker Hughes continued paying for maintenance and support costs of the software because they thought that the software will probably add new end users later on and they succeeded in their mission. There is also an option of waiting it out but this brings the risk of paying higher prices when the new users come.
Always negotiate as an enterprise
Another common error in judgment enterprises make is negotiating as separate divisions. However, this gives them poor leverage and thus may cause higher prices. But if an enterprise negotiates as a whole, they get far more leverage as the vendor has a lot more to lose if every division backs up.
Talk to analysts
This is a good move if you want to learn which vendors tend to give the best deals and are more flexible. These people don’t have to be analysts but also people from other companies and other users of softwares. If one vendor won’t give you a discount, maybe you can mention that another vendor is willing to give great deals.
Price doesn’t mean value
Sometimes the expensive software doesn’t have features and capabilities that your users are used to and that you need. Likewise, a less expensive software could lack some features as well so the best thing you can do is to check all of the features and the software’s capabilities before you buy while taking the price into account.
Don’t make a decision based on your personal preferences
“No matter what software you prefer, you need to ignore that and think about what’s useful and crucial to your organization. Making your choice based on what you like could be a huge mistake and cost you a ton so it’s best to focus on what you really need,” says a Data Analyst, Miranda Lee from 1Day2write and Writemyx.
Best cost reduction practices
Over the past few years, ISO and other industry bodies have worked together to create a set of software management practices which can lower the overall software management and maintenance costs.
- Eliminating or reallocating underused licenses
- Eliminating overhead associated with management and support
- Ensuring compliance during vendor license audits
Effective software management actually involves inventorying software assets, comparing what’s installed to the overall agreements and determining how well used it is. Companies that tend to do this on a regular basis have an opportunity to drive the software costs down.
However, most of the IT staff in companies doesn’t have the necessary documentation for the software because these purchases are most often made by individuals or certain groups that really don’t have an IT insight.
“This harms their possibility to negotiate discounts because vendors exploit their lack of documentation and knowledge. Organizations are therefore using IT asset management and software compliance tools to understand their situation and how to control their purchases and assets,” says Mia Puck, a tech writer for Britstudent And Australia2write.
These tools need to be backed up by good practices and systematic enforcement. Data center admins may have the old system running while the new one is being tested or used. But they have to erase the old software once they start using the new one. Another thing these tools warn is that some softwares leave something in the registry once you delete them and they sometimes allow two versions of the program to coexist.
It’s Your Time To Negotiate
There are many ways to get some leverage over your vendor, especially if you provide a usage statistics. However, you will have to know how to bargain. For instance, your vendor may say that a clause penalizes you for not using a license but you can ask to reallocate the cost and value of those licenses to another thing that you may need. What matters is that you recognizer that you do have leverage on the market, especially in these times and that you can use that leverage to get a better deal.