7 ways to cut your software costs during the economic downturn
"For the last three years, while tech was hot, I've experienced a bit of 'the price is what the price is' attitude from sales guys," Menefee said. "I completely think the power has shifted to the buyer."
As an example, Menefee said he is seeing "very aggressive pricing" from three vendors that are competing for a contract to supply Schumacher with a new human resources administration system.
Fauscette said that IT buyers should also watch areas such as workforce management software, where smaller, SaaS-savvy vendors such as SuccessFactors Inc. or Taleo Corp. could "go aggressively after Oracle or SAP." He even suggested that inexpensive or free desktop applications, such as OpenOffice.org and Google Apps, have matured to the point where organizations might consider dumping Microsoft Office, along with its accompanying Software Assurance maintenance tithe.
2) Consider cutting software maintenance — carefully
Discontinuing maintenance or support contracts with software vendors is a popular way of saving coin among corporate users. "A lot of enterprises will say, 'You're not giving me anything anyhow, so kiss that revenue goodbye,'" Geisman said. "Customers feel they've been cheated, and in many cases, they have been."
In the case of Microsoft's products, maintenance is "something many customers could dispense with," agreed Paul DeGroot, a licensing analyst at Directions on Microsoft, an independent research and consulting firm in Kirkland, Wash.
But cutting your maintenance contracts could prove costly if you're dealing with vendors that take a hard line in such situations, according to Eliot Colon, president of Miro Consulting Inc., a Fords, N.J.-based firm that focuses on software contracts and licensing strategies for Oracle and Microsoft users.
Colon recounts the case of a $1 billion-a-year semiconductor maker that dropped support for its Oracle apps two years ago, then found itself needing access to a mission-critical software patch. Despite offering a "six-figure flat fee" for the patch, the company was rebuffed by Oracle, Colon said. He added that after three months of negotiations, the chip maker agreed to pay several million dollars — the same amount it would have paid if it had kept an active maintenance contract the whole time.
In between the two extremes are vendors that may be willing to strip out elements of their tech support programs you don't use in order to help you save money, Geisman said.
3) Bring hard business data to the negotiating table
Sharing internal financial data may seem like a surefire way to lose the upper hand in vendor negotiations. But some analysts said that when done in good faith, it often is more effective than simply claiming corporate poverty or making empty threats to migrate to other vendors. Good vendors, they noted, will respond to calls for pricing that's more in line with the economic value you get from products.
For instance, if your company pays $100,000 a year for an application that you estimate saves a million dollars annually, Geisman advised that you take the data to the software vendor and tell it that the current cost "is a little too rich for our blood." By doing so, he added, "it becomes a negotiation, rather than you squeezing them."
- How Four Citrix Customers Solved the Enterprise Mobility Challenge Managing mobile devices, data and all types of apps-Windows, datacenter, web and native mobile- through a single solution.
- 8 Steps to Fill the Mobile Enterprise Application Gap Traveling executives and Millennials alike expect to communicate, collaborate and access their important work applications and data from anywhere on whatever device they...
- Seattle Children's Accelerates Citrix Login Times by 500% with Cross-Tier Insight Seattle Children's is a leading research hospital with a large and growing Citrix XenDesktop deployment. With ExtraHop, the IT team at Seattle Children's...
- McKesson Makes Application Hosting for Hospitals Faster, More Efficient With ExtraHop, McKesson identified the root cause of slow Citrix XenApp application launches and adopted a more intelligent, proactive IT operations model that...
- Transform Your IT Service Management Watch this webinar, to learn how EasyVista can increase IT productivity & efficiency and deliver streamlined & integrated IT Service & Asset Mgmt.
- Responding to New SSL Cybersecurity Threat The featured Gartner research examines current strategies to address new SSL cybersecurity threats and vulnerabilities. All Applications White Papers | Webcasts