AJC Bridge ERP System Selection: Negotiation

Hi, I'm Andrea Jones and this bridge video for ERP selection or system selection is on contract negotiation with your vendor. So whoever it is that is selling you your software and will also be providing you support and maintenance of that software as you go on in time. Okay, so I want to start with a little story. We are working with a customer right now who, when they were deciding to work with us on their selection, they talked to a few other firms, as one does, and one of the firms said to them that the firm's fee would be covered in what the firm could save this customer in terms of their contract with their future vendor. Right. So we could get you such a discount that it would basically cover the cost that's going to be for us to help you select. And they told us that and they asked if we could do that too. And I was like, well, pretty much everybody does that. Okay, so that's sort of par for the course because here's the first thing. There's always the msp, you know, the sales price, the listed sales price is always high. You are almost always going to be able to get 20 to 30% discounts off of those fees. It is commonly understood. And if you, you know, are signing at the end of a quarter, even better, at the end of the vendor's fiscal year, they're going to be trying to meet their quotas and they're more likely to want to negotiate. So just plan to negotiate, right? Like there's nothing wrong with negotiating. Everybody does it. That's what we expect. Also, you need to be ready for a give and take because it has to be a win win for everyone. Of course, this is a long term partnership. You certainly don't want your vendor feeling like they are giving you something for nothing because they're going to be less likely to want to help you in the future. So let's keep a real big open mind, but know that, you know, list prices are often inflated for this reason. I would say people expect to negotiate. You can also negotiate in certain terms. Right. So how many licenses do you have to buy before you go live and start paying for? When do you have to start paying for all of those licenses? Can you delay and then the implementation costs? Same thing on the timing of payment. How much do you have to pay before go live? How much can you reserve for after go live? Making sure that everyone's interest is aligned towards getting you to that go live and not elongating or delaying the project. Right. So there's that. There's also storage fees you can negotiate on if you have to save a lot of pictures. Maybe you do field service and you want your field team to be taking pictures of whatever it is they just repaired so that they have a good, you know, documented proof of what they did to the customer. Those kinds of things can be negotiated. We actually have a list and I've got it over here on my side screen. So it might be looking over every once in a while, but price locking. So how long will you get that initial contracted price and then what are the year over year price increases? We talked to a different customer, we were looking at their contract and it was some percent increase every single year. Remember that if you don't lock it in for a certain period of time and then you increase every single year, you're increasing on the increased. So I highly recommend see how long you can lock in that, that initial negotiated price and then yes, it makes sense to increase, possibly even to increase on the increase. However, at some point maybe you want to say let's make sure we're at market at a certain stage in the game. Otherwise it's like 5% this year and then it's 5% plus the 5% last year. It just, it stacks. I mean it's pretty quick. Okay, let's see here. I want to just look at some of this stuff. Oh, not to exceed an implementation prices, vendors will often say, hey, these are the number of hours that you can expect our analysts to perform participate in our project manager. By the way, their project manager is managing their side, not your side. And they probably have nine other customers. So don't count on them for your work. Anyway, here's what we think it's going to take you could I. Ideally you get a hey, we understand this is what you think and we're even willing to pay a bit of a contingency. So maybe it's, you know, here's what we think, plus this much of contingency only to be used if necessary and substantiated invoices. But after that you need to get in writing from us that we approve these additional payments. My favorite thing to do is to make sure everybody's expectations are aligned before you get started. And even if you have to set them a little high and hopefully it doesn't cost that much, that's better than setting them low. And it goes way over budget. Nobody is happy when that happens. Nobody at all. This is also true in timeline. So can you negotiate on the start? So let's say that you are signing in December. You got that great deal because it fills their quota. So many other people signed in December. The vendor is not ready to go in January. Or maybe you need to start in January and you're willing to pay a little bit more to get their really good team that's allocated to you. So think about this. We have one customer right now. It took them three months to get started after signing the contract because the vendor has people that they need to allocate and they may or may not be available right away. So you want to understand that data security liability. We're not lawyers. You need to have a lawyer look at some of this stuff. But who's responsible for any kind of data breaches? Hopefully that never happens. Any kind of outages. We had a different customer who the vendor. After we were done, you know, way past even Hypercare, which you'll hear about in implementation, the system crashed for more than 24 hours. Like that is not a small blip on the radar. That is this company having to go back to manually writing down orders so that their customers wouldn't be affected. That's a pretty big deal. Who's going to be responsible if something like that happens, you know, and they'll say this is never going to happen. We are in the cloud, this could never happen to us. Well, you know, that's what this company said. I would just be very clear if it does. What's going to happen here and what's the situation? What can we expect? Okay, forms and templates, these types of things, you might think that they're built in and some of them certainly are. It doesn't seem like it should be a customization to have a form or a template, but sometimes it is considered that it will cost more money. Can we just get an expectation of that up front? When you are live and now you are in maintenance, what's the service level agreement? If you send in a ticket, do you get a response immediately or put you in a queue? Is it three business days to get responded to? Is there some escalation path? Just try to be aware and ready for what to expect. If you're buying a third party like a Power BI access through your original vendor, do they have enough space and licensing to handle all of your needs or should you go directly to that third party integrator like Microsoft or whomever else to get and buy your own storage space? Okay, let's see here. We talked about maintenance costs, getting that in writing. Also, if you did do any customizations and you're in the cloud, what's it going to cost when the vendor upgrades to the next version of the system? How much is it going to cost to get your customization also upgraded? How often is that going to happen? How much notice are you going to get so that you can make sure that you're prepared to pay for that or is there any alternative option to having to pay extra money? Okay, yes. And I guess the last one here when or could anything change the terms of the contract, right? Do you have to put that in writing? Is it a mutually agreed upon thing? Can they just change certain things whenever you kind of just have to agree Again just get these things understood, have a lawyer look at them, someone that has looked at these before. We have a lot more stories. I can't share all of them today but please feel free to reach out. We're happy to share. Thanks so much for watching. Good luck.