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New Dynamics of Deal-Making

It's not just about products and prices. Users want commitment.

May 24, 2004 12:00 PM ET

Computerworld - When his 4-year-old Hewlett-Packard server died recently, Steve Brown thought that moving his data replication software to a new two-way HP server would be simple. Was he ever wrong.
Brown, vice president of IT at ECMD Inc., a building components manufacturer in North Wilkesboro, N.C., said the software vendor, whom he declined to name, told him his licensing fee would be bumped up by $25,000. The reason, the vendor said, was that the software pricing was now based on processor speed, and Brown's new two-way server was at least three times faster than the old one. Brown was incredulous. "I told them it was ridiculous to pay a dime," he said.
After a lot of negotiation, Brown got the vendor down to a $7,000 increase. But it still left a bad taste in his mouth. "I think it's gotten more complicated for you to buy [software], and more complicated for you to maintain what you've bought," he said.
Indeed, many users complain that dealing with vendors is becoming more complex as new pricing and licensing models emerge and outsourcing options gain prominence. And according to the results of a survey of nearly 1,200 IT and business managers conducted by Computerworld and InterUnity Group Inc., their biggest beef is with software vendors. The highest customer satisfaction ratings went to vendors with large hardware product lines as well as software, like HP and IBM (see the complete survey; free registration required).
Still smarting from the technology spending downturn, vendors are finding they have to work hard to gain the business of a demanding and selective user community. Users not only want to reduce the number of vendors they deal with; they want those vendors to demonstrate a long-term commitment to working with them to boost their bottom lines.
Price remains important, but it's not the only thing Ron Calderone wants to discuss. The CIO at Reliant Pharmaceuticals Inc. in Liberty Corner, N.J., Calderone sees vendors as strategic business partners, and he has a list of criteria they must meet, among them adoption of acceptable service-level agreements (SLA), adherence to standards and integration with existing platforms. Calderone also wants to hear about each vendor's strategic vision and plan for executing it.
"If they really don't know where they're going, then why would you want to follow them?" said Calderone.
Ben Glicher, chief technology officer at EquiLend Holdings LLC in New York, sought an SLA calling for 99.9% uptime in his managed services contract with San Francisco-based Totality Corp. His contract includes financial penalties and an ever-present threat of termination under

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