Tough Talk for Hard Times

Nine ways to get more out of software vendors in 2009

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7. BYOC.

Auer strongly recommends that clients bring their own contracts whenever possible and that they let the vendor know they will be doing so in the request-for-proposals stage of the deal.

"Here's a legitimate problem for vendors: If you pull out your own contract at the end of a deal, there's rarely a way for vendors to agree to it quickly," says Auer. That's because the lawyers representing vendors are familiar with their clients' formulaic contracts but would require additional time to go line by line through a customer's contract. In fact, says Wang, if you do insist on using your own "paper," expect to add three to six months to the negotiation process, even if you state your intention upfront.

In Disbrow's experience, customers outside the public sector almost always have to use form contracts offered by SAP and Oracle. But some customers say they're comfortable using vendor-generated contracts; they merely insist on amending them.

"We've never signed any kind of an agreement without making changes," says Tyrone Magby, IT sourcing manager at Fiserv Inc. in Brookfield, Wis. Key examples include the addition of indemnification clauses and guarantees that the maintenance terms are tied to the net price and not the list price of the system, he says.

8. Don't Be Rushed.

Don't allow a vendor to hurry you or corner you into making a deal to meet its timetable. "We don't like to be forced into [meeting] a date," says Magby. "We don't play that game."

"If a vendor gives you less than a month to do a deal, you'll almost certainly lose financial benefits to your company," says Schleiden. That's because 30 days or less isn't enough time for customer companies to work their own provisions, like audit requirements, into a contract or to negotiate and "make the vendor sweat the competition," says Schleiden.

9. Run the Clock.

The best time to negotiate a software deal is toward the end of a vendor's financial quarter or fiscal year, when its salespeople are trying to hit their numbers. Disbrow says contracts landed during these periods can include overall discounts of 5% to 10%. To gain maximum leverage, Auer recommends starting the process 60 to 90 days before the end of a fiscal year, or 30 days before the end of a financial quarter.

"Vendors are real serious about salespeople making their quotas," says Auer. "They can make magic things happen during those times."

Hoffman is a former Computerworld national correspondent. Contact him at tom.hoffman24@gmail.com.

This version of the story originally appeared in Computerworld's print edition.

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Copyright © 2009 IDG Communications, Inc.

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