Cost Cutters! Just Ask For It
A CFO magazine article encourages cost cutters to “just ask for it” when pursuing discounts. They go on to give some great advice:
“This usually involves an exchange: customers agree to buy a broader range of products and services from the vendor, or commit to a minimum purchase amount, and in turn get a better price.”
Good advice IF the rationale for the purchase, in this case large software systems, makes sense. It is always best to realize the difference between a contract and an implementation. Interestingly enough, those wanting a discount lose touch with their ability to implement what they buy and therefore the latent costs involved.
How do you buy technology? Do you partner with the vendor in a way that both you and the vendor benefit? If you don’t you will inevitably get less attention when you need it the most.
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5 opinions for Cost Cutters! Just Ask For It
Alan Wilensky
Jun 25, 2008 at 9:09 am
The delta in licensing costs with implementation (especially when purchased as a package through the ERP /CRM vendor) can very by as much as 300%, for similar sized installations.
Ask to see appropriately redacted terms for comparable sites in your area - if they balk, thank them and say you’ll get back to them. Then let them wait while you shop other solutions.
Bob Turek
Jun 25, 2008 at 10:30 am
Alan- the issue of implementation contracts bought with packages is fascinating. Software companies are feverishly coming up with quick start programs that are less in scope to enable them to compete and, supposedly, to allow the customer to better compare the contract prices. The problem, as you know, is that the quick starts don’t reflect what will ultimately be implemented and the services required- which is very difficult to figure out at software/services contract time unless a detail assessment is done. Are you suggesting that a buyer “ask to see” contracts of other buyers to make sure they understand the scope? or is this dealing with some other issues? Maybe an example? Thanks for commenting.
Alan Wilensky
Jun 25, 2008 at 10:38 am
I tell the clients to ask to see properly redacted contracts for similarly sized companies with roughly the same infrastructure requirements.
Do I realize that there will be great variations in actual implementations that will affect the final quote - yes.
I am mostly trying to gauge that reaction of the software sales team…shaking them up so we can get to reality based site licensing fees. After a while, we start to see norms sifting out in the given geography. There are great variations for marquee software sold by different regional teams, especially, as said before, when they roll in the installation, integration, etc.
Alan Wilensky
Jun 25, 2008 at 10:50 am
Also,
If the sales team startles or flinches when asked for comparative local quotes, there is a problem. Let them waffle. Walk out of the room.
If they slap a few well prepped quotes, preferably with references of local yokels that have a similar sized setup, that’s a good sign.
These regional ERP and enterprise sales teams should have a portfolio of local success stories. This is becoming, however, more rare. The industry is becoming distinguished by the trail of wreckage it leaves behind.
We (I) look to emerging web 20 and SAAS replacements for what were the staples of the mid range heavy iron software default choices.
Bob Turek
Jun 25, 2008 at 7:54 pm
Alan- fully understand the geographic norms- seem to be driven by the sales management involved. Not sure about the “trail of wreckage” being cause by vendors- I agree that successes are rarer but I think it’s also poor project management after possibly a poor solution acquisition process.
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