Understanding Your Software Vendor and What They are Selling you

Okay. From an operation perspective, what you want to be talking to them about is partnership, right? You're selling to them now, right. And that's a, I can't, you know, I can't emphasize that enough either, is that you're actually in selling mode, right? You want to make sure that everyone under, on your team internally understands that they are a salesperson. You know, no matter if they're an IT analyst, a finance business analyst, a procurement team member, they are a salesperson trying to sell the vision of what your team is trying to accomplish in this, this, this emergency, right? And you want to let your vendors know what partnership is or more importantly, isn't, right? So it's not about them increasing revenues or selling new licenses, right? They need to know that. They need to know that up front, right. It's about helping each other through tough times so that when the good times come, you can excel together again. Right. It's taught. And talk about real things, not veiled threats, right. Like in 2008 companies. Liam, I'm sorry, sorry about that. We had snow here, snow day here today. So it's about, you know, talking about real things, right? Don't use bailed threats. So, you know, for instance, if you're on Microsoft 365, Microsoft is not going to find a threat of going to Google Ballot. They just aren't. So don't even talk about it, right? Unless it truly is real, they're not even going to believe it. Flipping from Azure to aws, they probably won't believe it because those aren't easy things to do. And so unless you're well down a path with that, they're not going to believe that. So you have to talk about things that are real. Like things that you could easily do, right? Potentially, maybe we're in Azure, but we could easily come back to on premise, right? That might be a real threat because we still have the data center, we still have the hardware, we haven't gotten rid of it yet or whatever, right? You want to let, let them know that projects can be put on hold indefinitely. So things that they were expecting from a net new revenue perspective, that is net new, those things can be put on hold indefinitely. If you guys cannot accomplish the overall goals that you're trained to do, there just won't be money. Those budgets, those budgets will be taken away. And you definitely want to create a vendor scorecard and share it with them, right? Have a process for them to understand it and you know, and to understand how you're scoring them. Some of it Might be saving. Some of it might be how they're helping you, Some of them might be how they're supporting you. There's intangibles in these things, but you want to definitely create a vendor scorecard and make sure that they understand it, right? So you also want to understand them, right? Understand that they're going to have the same fears that you do. So layoffs was one of the biggest things that we heard. A lot of people were saying that when we asked, you know, what's your number one fear? There's a lot of people that answered that they're a fear of losing their job or being laid off. Their vendors are having those same fears, right? They're fear that they're not going to be able to make their quota and that there's going to be no bonuses or that if they don't make the bonuses, they won't even get laid off. They don't make their quota, they may get fired. You know, there's massive pressure on them from the business to perform. But a lot of them don't know how to perform under pressure, Right. They actually hide their head. And this is one of the things I'm going to go back to it. It is really good in the emergency. When pressure comes, it responds. They don't hide their, their, you know, hands, heads in the sand. Sales reps hide their heads in the sand, right? So they got massive pressure from the business and they're. They don't know what to do about it. And like I said, they're going to do the opposite that you do. Right? And you're going to need to know that many companies are asking for help. It's not just one. It's not just you going to them. All their clients are coming to them saying, we need reductions. Right? But the thing to know is that few of them will be as organized as you and very few of them will actually follow up. They're going to make the ask. The vendors are going to go away for weeks and weeks and weeks, and then they're just going to. I asked and I couldn't get anything right. Not you. You're going to take massive action. You're going to have plans. You're going to be talking to them every day, every week, every, you know, etc. Etc. They're not going to think carefully about their ass. They're not going to be related back to scorecards. They're not going to have their budgets and all their renewals and everything figured out. They're not going to have the Data to have these conversations, you know, you want to consider their emotional state and how you can work with that or around it. Right. Remember, if they're in fear of having their jobs, losing their jobs or not hitting quota, you know, that's, that's real. How do you work around that? Maybe you need to escalate to somebody that has, you know, bigger quota, bigger budgets. Right. So you know, for instance, if you have a sales rep and they have a 10 million doll quota and a manager that has 100 million and a VP that has 500 million and a country manager that has, I don't know, 2 billion, you know, you trying to get a million dollars from Your rep, that's 10% and you can see the cascading effect at 2 billion. It's very small. And so their emotional state is going to be different depending on who you're talking with. Right. You definitely don't want to shy away about talking about opportunity, but make sure it's real. Right. So for instance, if you're looking at, you know, a reduction from a vendor, is there a consolidation that you can have where maybe you're using a compet product that's not as strategic to you that you can say like, look, we need this reduction, but we'll start working with you on this. Doesn't necessarily mean we're going to buy it. We'll start working with you on this migration. So maybe six, nine months down the road that'll bring back that revenue loss once we were able to replace that product and you've proven out that it'll work and all those sorts of things. So from an operation perspective, it's all about data, right? And there's different types of data, there's contract data, right. So quite often we've seen people that haven't even read their contracts and don't know what are, what are in them, right. So I just had a conversation helping one client with this and the vendor was saying something and telling them that they owed them a bunch of money on some true ups and things like that. We read the contract, we went back and said this clause here says that you don't need to do what they're saying. And what they were saying was something that was standard. But six years ago they'd negotiated a non standard clause that everybody forgot about and all it took was me spending, I don't know, half an hour reading their contract to go and say they're wrong, you're right, like you don't need to do this. And then we push back on Them, right? So data sits in contracts, it sits in that deployment data. So it's installed out there, what's actually in use, right? And then what are our product roadmaps, Right? What are our roadmaps with that vendor? What are our roadmaps with other vendors that have competing products? How does that all play together? And so you want to get that data and you want to organize it and you want to use it to your advantage, right? And so how does this all come together? So, you know, I talked about how Brandon says to me, what you say is what you know, what you think is what you say, and what you say is what you do. And what you do becomes your legacy, right? So you're going to be. You have the legacy of, you know, that you were the savior IT budget because you went out and did these things and were able to drive savings, right? So some people think to me, say to me, like, like this is great, but it's kind of like, you know, kind of almost like pie in the sky stuff. How do I actually do this? So let's start talk. Let's start by talking about what value is, okay? And so this is the conversation that you want to have with your software vendors or start of it, right? And so again, I like to go back to the definition of words because I believe words are very powerful, right? And so if you look at value, which most like you when you get into partner credential conversations, it's about value, right? We value your partnership, we value your business. We want to get value out of this partnership. And so most of the time, software vendors are talking about value in the terms of a verb, which is estimate the monetary worth of something. So, you know, you think about it. They'll say things like, well, if you buy this EA or this licensing program or this from us, that software is valued at 1.2 million. But in the EA, we're selling it at 1 million. So there's a value of 200,000 or 20% there for you, right? Or if you purchase this bundle of products, it's at a 15, 50% discount to buying ala carte. The way that they talk about value is all around monetary worth, right? But there's a value equation that I found from this guy Alex, Alex Hermosi of acquisition.com that I think is brilliant, right? Because he tried to go out and actually define what value is. And so he has a definition of value that says value is your dream outcome. Outcome times the likelihood of it happening divided by the time delay in order to get that that outcome times the efforts plus the sacrifices in order to get there. So if I look at that, what this may look like to a vendor like Microsoft is that, you know, the dream outcome is you purchase what Microsoft wants you to purchase. Right? So for instance, bundles like the M365, E5 or more Azure, it's not necessarily what you need, right. But you're buying what they want you to. The likelihood of it happening is probably 100%. We've seen people that were on lower bundles and, you know, discounts being removed and if you're not moving to the bigger bundles or only putting, you know, concessions on the bigger bundles, not on the lower things, like they have all kinds of games that they try and play in order to get you there. And evidently you always end up going there. Right. There's really not a time delay for Microsoft, right? In this case. Right. The reason for that is now we're actually seeing them put into their quotes that if you do not renew this by a certain date when it gets processed, our processing team can put a 2 to 5% increase on what we have in this quote or what you've agreed to. Because you didn't do it on time, Right. So they're even putting pressure on you now, using language to force you to pay more if you don't renew on time. Even though they didn't answer your questions for weeks and weeks and weeks. What's the efforts and sacrifices on their behalf? Probably very little. Their typical way that they sell, and this is true for most of these software vendors and big renewals anyways, is, you know, they might come in and do some roadmaps and some briefings on products, mostly to try and convince you of buying the bigger bundles. Even though they haven't even talked to your technical teams to figure out what your roadmap is and what you have in place today and when you could actually consume it and things like that, they'll do some licensing updates and then the value to them is huge. It's massive. You sign a new three year deal probably 20 to 40% more than you were paying and you bought more software yet again that you likely aren't ready to use. Right. And so that's what value looks like to Microsoft. And I know I put that in a negative light, but that is really what they think. I mean, we've heard them say if you do not go to an E5, you are not a valued customer. You're not, you know, you're just, you're just, you're just A, you're a transactional customer. Right. So what's value look like to you? Right. The dream outcome might be something like we only want to purchase what we need. We want to reduce our cost 10 to 20%. What's the likelihood of that happening with Microsoft? Very low. Right. The reality is we have little to no leverage over Microsoft. Right. For all those reasons. We just talked about the time delay, probably none, because they said they're putting pressure on us to get it done. But internally there's a lot of effort. We're going to spend a lot of time getting data that we're not sure whether is the right data or it's not organized or how do we actually use it With Microsoft, building out a plan, having lots of meetings, meetings with them that, you know, they just come and say the same thing or give us the same proposals. It's really painful. Right. And what's, what happens when you sign this? The value to you is less than your last year. And the reason for that is you're forcing the price increases. You bought more stuff yet again that you didn't use and you don't need it. Right. And this is the cycle that these guys get built into it. When I was at Microsoft, these programs were designed to do this. Oracle's no different. IBM is no different. You know, SAP is no different. Right. And so what is the different. What's the value when you use data? Right. The value when you use data is that you purchase only what you need and reduce your cost 10 to 20%. Plus. We've seen people use data that have decreased their cost 40 to 50%. Right. But most of our clients are averaging in around 22%. Right. The likelihood of it happening is high because you have data to know what you need to purchase and you know how to get it at a fair price. Right. The time delay is still none. Right. Because you still have to renew these things on time. The vendors put all that pressure on you. Right. But it actually might be longer. Like you could actually get it done faster. So we've had people that are like, we started working with them renewals in a year and we're done in six months. They planned on working on a year, we're done in six months because they had all the data. They could just go and get a deal done. Right. The efforts in sacrifice, they're actually a lot easier because all that back and forth you have with the vendors and stuff becomes so much easier when everything is backed with data. Right. When Microsoft says, we increased the price of an E3 by 11 because we put all this new technology and we put billions of dollars in R and D and therefore we had increase our price 11 and we put in to do and yammer and blah blah, blah. You can go in and show them we're not using any of it. In fact we're only using 22% of what we have. And so we're not taking that 11 and we're, you know, not doing what you say. This is what we need, this is what we want to buy. This is the value, right? And so this becomes massive to you because you buy what you, you get a deal that you wanted at a price that is fair, it aligns with the value of what you need and it has. It's like you hit the easy button. So often our clients when they go through this process are like, man, that was the easiest negotiation. We, right. I tell people all the time Microsoft and this, this slide is for a specific Microsoft presentation I do. But it's same with Oracle and IBM and all them, they have a plan with how they're going to work with you for the next three years based on your roadmap, right? This is the key thing coming out of this because you go through and you do these surveys and understand your product roadmaps and understand your usage and understand all the third party products and what the plan is around that you can go to Microsoft and say here's our plan for the next three years on how we work together, right? How valuable is that? So many Microsoft reps couldn't tell you what competitive products you have when those are coming up, when they would renew. They just think that you can just go and buy an E5 and turn it on tomorrow and get all the value out of it. And we know that's not the case, right? So let's talk about a process, right? So again, this is a very specific Microsoft one, but it works the same with everything, right? So when we work with clients around these processes and this doesn't matter whether you're in a renewal or whether you're going to try and do something midstream, right? Or a net new purchase, what you want to be doing is spending 65% of your time, two thirds of your time on what we refer to as setup and deal design, right? And so in other words, that's setting up the project, understanding those KPIs, understanding the milestones, understanding the team, understanding the budget, all that sort of stuff. And then you want to get into deal design, understanding the usage data, your product roadmap how does that align to licenses, all of that. And then when you have that, then you get into the tactics of going to the table with the vendor and having discussions at Give and takes. In a true negotiation, the way most people work is vendor comes in, tells them what they're going to renew. They try and negotiate on that. You know, so I'll just use Microsoft NEA with $5 million a year. Microsoft comes in with a proposal at $7 million a year with all this stuff we don't need. We end up trying to have all these meetings with them to get it out, try and just tell them that we don't need all that. We just want the 5 million. They're telling us the 5 million 6.5. So you should take the. They end up negotiating 7 million to 6.4. It's less than 6.5. It's 30% more than they were paying. They filled the feed it and they sign that deal. When you go through this, this is how you get that 10, 20% more in terms of savings. Okay, so let's talk about data. The reality is there's so many purchasing options when it comes to licensing. It makes it so confusing. But when you know what you need to buy, it becomes very simple because you don't care how you're buying, only what you're buying. See, the problem most people get into when it it comes to licensing is that they're buying programs. I'm in a Microsoft ea. I'm buying an ea. And buying an ea. You're not buying any A. I have this conversation all the time with people. You're not buying any a. You're buying Microsoft 365. The EA is the vehicle. And Microsoft has told you that the premium vehicle called an EA is the bomb. And that's what you should be buying. Right? But it comes with all kinds of restrictions. I got to buy Microsoft 365. I got to buy it for all my employees. You know, there's all kinds of things in there that maybe make it not work. And so I know this is a bit of an eye chart, but the types of things you want to be looking at is like, I, I can actually go in and organize your data to show you that 22% of your users don't even touch Microsoft technology. That's not uncommon. We see that in so many different industries and organizations, yet they're buying expensive E3s for them. Right. We had one client spending 18% of their Microsoft 365 on licenses for vehicles, actual vehicles, driving Things because they were sending email to them and they didn't know any other way to do it. Right. But when we got the data, we were able to show them and take that out, how to get rid of that 18%. Right. And so you want to be able to look at your data in ways to see what you're doing with it and ways to drive out cost and the different options, right. You want to be able to visualize it. Right. And so a lot of times people will tell me, like, Mike, I'm not a business analyst. I don't know how to go get the data. I'm not technical, I don't have access to the systems, I don't have the time required to do all the work. You know, will I really get better results? Right. So if we go back to mindset, that's kind of, that's kind of in that, you know what you think, right. You're gonna think this stuff, you're not going to get the results. Right. But the reality is we talked about people in developing a team, this is what the team is for, to fill in the gaps. So if I'm a vendor management person responsible for trying to go and drive some of these savings or procurement, you don't need to be a business analyst. You get somebody on the team that can do that. You don't need to be technical. You get somebody on the team that does that. You don't need to be able to have access to the systems. You get somebody on the team and get that team marching to the same goal and objective and they will do, you know, get you what you need. Right. But you need to understand what you need to do. You need to be the captain the of the fishing boat going out looking for that blue marlin in the data and figuring out where it is and how to get there. Right. So what have we covered so far? We've covered, you know, budget, we've covered, you know, finance people. We've saw operations and mindset. Right. And so basically what I want to talk about today, and this is the, the last little bit here is if you're struggling to do this, we have two proof of values that we're offering right now where it's basically you're at no risk, it's 100, 100 money back guarant that we will go in and find savings on azure or, or Office 365 and Microsoft 365 or both. So we have an Azure proof of value and we have an M365 proof of value where we'll connect to your data and we'll go and look and we'll show you where there's opportunities to find savings. And if we don't, you don't pay us for the proof of value. Right. And so basically if you're interested, there's a couple of. You can just hit the. Take a screenshot of this. This will give you the, the sheet that talks about what the proof of value for O365 or Azure is here. But literally it is a 30 day program where we come in, we connect to your system. We're going to show you that if you use our services and our systems in order to get this, that there's an ROI on our services to help you drive those costs out. And that's what this really is. And like I said, if we can't do that then you don't have, then you know, we'll give you 100 money back guarantee. We've also included other things in here like in our O365 one we have like half day boot camp that I did on training on how Microsoft 365 licensing works. Usually I think we charge like 397 for that. We've included it for free. We're going to give you some of our worksheets and our modeling templates on how we model different licensing options and things like that. So it's more than just the proof of service. You get access to my team to answer questions and things like that. But here you know, we're going to go in and we'll show you for instance on Microsoft 365 that you have a number of users in block status or you got people that you're paying for Visio, like 50% of Visio licenses by the way aren't needed. We have data to back that statement. But we'll show you the users that aren't using Visio that have subscriptions assigned to them and show you a few of them so that you can go and clean those up and you know, like I said, show you the value here. So for instance, we might charge $5,000 for proof of value and show you that there's 50,000. You know, it's $50,000 a year for the service if you choose to move forward. But we're going to show you $500,000 in savings. And you know, if we do that then you move forward. And so if you, if you're interested in that, you can take a screenshot of this barcode here. I think That's QR code. Sorry, that's what they're called. And that'll pull you up to book a meeting with one of our team members who can give you more details on what our proof of Value services are and.