Planning a purchase from a major IT vendor? In this still-tough economy, negotiating pros recommend being aggressive and creative, as well as analyzing your requirements first so that you don't buy more than you need and know where you can compromise.
Here are the top tips from consultants who help customers negotiate pricing, terms, and conditions with vendors such as Cisco Systems, EMC, Hewlett-Packard, IBM, Microsoft, Oracle, and SAP. We've arranged them in three groups:
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Negotiate with a senior vendor exec. David Blake, CEO of IT sourcing and commercial advisory firm Upper Edge, recommends forming relationships -- and negotiating -- with a senior executive at the vendor. This creates a human bond that helps cut through bureaucracy and encourage cooperation, while showing you want a strategic relationship rather than just a transactional relationship when you need a specific product.
Reject pricey maintenance plans. A growing number of customers are rejecting high-paid maintenance plans altogether, consultants say. This is especially true for older products that don't need updates or aren't likely to be updated, as well as software that customers can maintain themselves or for which third parties provide better support at lower cost, says Phara McLachlan, CEO of IT management and consulting firm Animus Solutions.
If you do opt for maintenance, Nuckles recommends negotiating maintenance separately from licenses to assure that you get the best price for both. Yet another option: Buying maintenance only if and when you need it, which "puts the onus on the vendor to keep developing meaningful updates," McLachlan says. Some vendors are penalizing customers for dropping maintenance, making it another issue you might want to address in your terms and conditions upfront.
Don't make idle threats. Negotiating hard is one thing; misleading your vendor is another. For example, don't tell Microsoft you're considering a move to open source unless you at least have a transition plan or pilot deployment to show you're serious. "Once Microsoft understands it's a bluff, it will feel much more secure and confident, and be less ready to discount heavily," says Ullman. With its software integrated into enterprise ERP, workflow, management, collaboration, and other systems, Microsoft knows replacing it with an open source alternative will be too complex for many customers, he says.
Tricks the vendor might try to pull on you You may be looking for a better deal because of the tough economy -- but so are the vendors who are trying to preserve income and even grow despite the tough times. Many will play hardball as well, and a few will go beyond tough negotiations to underhanded techniques. Be sure to ask these key questions to avoid both inadvertent and intentional unpleasant surprises.