Enterprise Agreements? Not So Fast!

Computerworld - Enterprise agreements consolidate contracts with a single vendor across the corporation to reduce overall costs and provide consistent service. Seems like a good idea, but many enterprise agreements are fairly
inflexible and may not meet the needs of every business unit. Under special circumstances, multiple contracts or creative solutions are more effective than standard enterprise agreements. Consider the following situations:
International anomalies. Global enterprise agreements may be tempting, but their cost-effectiveness can vary significantly for units operating outside your own country. One client signed a global agreement to purchase PCs. While the supplier's PC prices in most industrialized countries decreased, they increased in parts of Eastern Europe and Asia. For example, the local manufacturer that the business unit in the Czech Republic had been using was 20% less expensive than the new Dell enterprise agreement. The increased costs from the enterprise agreement would have caused the struggling Czech division to lose money and risk being shut down.
When considering an enterprise agreement, evaluate its scope and impact globally, and exclude countries where costs would rise. As an alternative, use some of the overall savings to subsidize countries facing cost increases.
Global agreements can also affect service levels adversely, because when products are centrally purchased, local representatives may not receive incentives to provide high-quality service. At one client where Asian divisions purchased their own servers through local dealers, a new enterprise agreement was signed to reduce acquisition costs. But since the local dealers received no sales credit, service levels plummeted. When the contract was renegotiated to give local dealers partial credit, service returned to normal.
Architectural migration. Enterprise agreements sometimes require complex technology changes. If you plan to change architectural direction, be wary of anyone pushing for enterprise agreements before your architecture is stabilized. That way, you'll avoid the expense and upheaval of unnecessary conversions.
Exceptional existing contracts. One division may have an existing contract that is better than the proposed enterprise agreement. This can occur when a division has a more mature supplier management program or when a vendor grants cost concessions during unusual circumstances (for example, during initial product launches or end-of-year sales, or when a vendor desperately wants a specific company's business). The overall corporate savings may not warrant the political cost of a division's unhappiness over imposed price increases.
Research existing contracts before signing an enterprise agreement, and negotiate to exclude divisions as appropriate. But maintain multiple contracts only as long as significant benefits exist.
Franchisees (or licensees). Centralized buying is often touted as a benefit to