How to negotiate the best deal for your major software renewal

The increased digitalization of business operations today means that organizations are ever more reliant on software and cloud suppliers. Since this technology takes up such a large amount of total expenditure, contract negotiations with these providers have never been more important for IT and Procurement teams. However, organizations often struggle to achieve the best deal when coming up against mega vendors like Microsoft, IBM, SAP, Salesforce or Oracle, as they have little experience or knowledge in how to secure an optimal contractual outcome.

Negotiations are overwhelming, complex and time-consuming. Enlisting impartial advisers that can provide expert knowledge and advice at every stage will help secure the best deal for your organization.  You need to consider the following when planning for major negotiations…

  • Why preparation is key – extensive planning is necessary prior to negotiations. There is no ‘one-size-fits-all’ approach – the amount of preparation required depends on many factors
     
  • The art of negotiation – Vendors will be well-prepared with information on your business. It is important to construct a complete Bill of Materials that supports your business strategies and helps you understand current and future usage
     
  • How to deliver a deal that suits your needs – The following steps should be taken before negotiating a contract: set the agenda, avoid acts of brinkmanship, benchmark your ambitions, understand the vendor’s sales objectives and discount regimes
     
  • Contractual penalties – Paying attention to cost-implications that any changes in usage will have been sustained over a contract period is crucial for organizations to keep in mind
     
  • Assigning specific roles to your negotiation team – Be selective when creating your team for negotiations and decide who will give you greater leverage during important discussions
     
  • Knowing when to escalate – Remember that pace, people and forging peer-to-peer relationships with the vendor are key when escalating discussions to ensure smooth negotiations
     
  • Independent advice – At Livingstone, we believe that obtaining impartial advice is key to maximizing the outcome of the negotiations for your business
     
  • Post-signature practices – The hard work isn’t over once the deal is signed. Keep in mind the negotiated terms in the contract and start preparing for the next renewal.
     

Look out for our forthcoming best practice guide ‘How to strike an optimal deal for your organization’ that goes into further detail on each of the above points. It is designed to help empower organizations throughout the negotiations process, to maximize value, achieve successful negotiations and make cost-savings.

 

ABOUT THE AUTHOR

Ian Camino – Chief Revenue Officer, Livingstone Group

Ian joined Livingstone Group as Chief Revenue Officer, through the acquisition of Cloud Optics. He is a globally experienced leader in Software Sales, Consulting Services and Software Asset Management, with over 18 years’ experience in Software License Consulting. He has worked across all different types of client sizes and verticals within Europe and North America.

Prior to joining Cloud Optics, Ian was responsible for building, transforming, and leading one of the largest specialist consulting practices in EMEA. He has a successful track record of designing and building Cloud Applications that facilitate the delivery and management of key License Consulting project components.

 

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