Jay Bishop shares five strategies for IT managers negotiating software contracts: set clear goals with a pricing proposal, use usage data to avoid audits and find savings, benchmark against market rates, align with internal stakeholders and legal after vendor talks, and bring in external experts when needed.
Chapters
Are you an IT manager nervous about heading into negotiations with a big software vendor? Maybe one that makes up a considerable portion of your full IT spend? Don't worry, we've been there before and we know what you're going through. So just take a deep breath and I'm going to walk you through five key strategies that will help you approach this negotiation with confidence. Hey, it's Jay bishop with Metrix Data360 and I've been part of a lot of different contract negotiations and I've seen all the traps and tricks that these vendors try to pull. But no matter what vendor it is or what company it's for, I always come to the table with these five things in mind. So, number one, know your goals. So part of knowing your goals is knowing what you need and what you don't need. So before you even start negotiating, you want to come to the table with a proposal. You want to tell them what you want pricing for. If you need to achieve a 20% savings delta, then you need to know that up front. So come to the table with a contract proposal. Don't wait for them to come to you and give you what they expect the deal to be. Go to them, tell them exactly what you want to see pricing for. And the reason that it's key that you do this is if you don't, they're going to give you a proposal on what they're expecting the deal to be based on what they want to sell you, not what you need. Number two, Monitor your software usage and deployment data. Strict monitoring and understanding your usage data is very important in the negotiation process. It's important because it demonstrates strength and understanding to the software publisher you're negotiating with. It can also be a fabulous deterrent against being audited by that publisher. If they feel that your house is in order and that you understand your numbers, they would have no reason to think that there would be compliance gaps within your organization. Knowing the stats around your usage and deployment data can be a huge advantage in contract negotiations. It's not uncommon for us to see massive spending spikes around misclassification of usage data. If you want to see what I'm talking about as an example, check out this video of Mike Austin talking about how he found over a million dollars in savings for one of our clients just by digging into the usage data around a certain product. Number three, do your homework and know the market. Understand both the risks and advantages of moving away from or staying with a current product set. If it's not something that you can possibly switch to or move away from. Generally, the publisher will know and will call your bluff and it will cost you. And finally, whenever possible, try and keep tabs the pricing in the industry. Understanding what companies are paying that are of similar size or in the same vertical as yourselves will give you a leg up in negotiations on understanding where those publishers can go to with their pricing. Number four is a really important one. Make sure you communicate with stakeholders and legal teams internally. One of the things that's going to happen during the negotiations is the publisher is going to want to sit down and have meetings with you to talk about, demonstrate new products, capabilities, etc. Make sure that during these meetings you say as little as possible and that when the meetings are done you go and you consult with the stakeholders and legal teams to make sure that your response is appropriate and in line with what you're hoping to get out of the negotiations. And the reason this is important is because each one of those departments have different needs and requirements. The person from legal might be thinking about risk and potentially what could happen in the future that could reflect poorly on the company. Making sure that the language is all correct, where the person from procurement their main concern might be in the pricing and the discount, right? And the person from it their main concern might be making sure that the functionality of the product that is being purchased as part of the negotiation meets the needs of the company as you move forward. And number five, know when you need to call in the experts. It can be hard to beat the vendors at this game. Most of them have actual playbooks that they've thought through around how they want the negotiations to go and how they want to control the negotiations. That's why if you're looking for peace of mind during your next software contract negotiation, you should consider calling in external experts. People that have been around the so called contract negotiation block. Fortunately, MetrixData 360 has a whole team of experts here on staff that can help you blow your next software contract negotiation out of the water. Click the link on the description below, fill out the form and we can help back you on your next software contract negotiation. If you want to learn more about the software asset management industry, check out our other videos over here. Thanks for watching and don't forget to hit the like or subscribe button. I'm Jay Bishop and remember, keep your contracts clean and your contract negotiations smooth.
