Negotiation Know-How: Optimizing Your IT Operational Costs

Your work involves negotiating software and cloud contracts. You’re aware that time limits can press operations managers to sign contracts as they receive them, and that this, in turn, can lead to unexpected costs.

Establish a Seasoned Infrastructure and Operations Department for Your Firm

Retain Valicom, and your company effectively establishes an infrastructure and operations (I&O) department.

Your company can then:

  • Spot your SaaS and cloud-based options,

  • Leverage a deep awareness of accessible vendors' (or a particular vendor's) goals; and

  • Control your company's ongoing contract costs.

Tap Into the Power of Proven Negotiation Strategies

Roberto Sacco, a former Western Europe senior business desk manager at Microsoft, is now a senior analyst at the advisory firm Gartner Inc. Sacco recently published a paper for the firm, backed with case studies, titled Optimize Your IT Operational Costs With Gartner’s Top 7 Software and Cloud Negotiation Tactics.

Sacco’s recommended tactics provide an excellent summary of the strategies that Valicom puts to use for your company.

Stated simply, Sacco recommends (1) stimulating competition among your accessible vendors; (2) finding optimal times to make deals; (3) optimizing your existing inventory; (4) studying your vendors' motivations; (5) assembling an experienced negotiation team to manage the flow and the timing of communications; (6) averting undercutting a deal later—for example, through large price hikes at renewal time; and (7) identifying the extra costs that warrant upfront negotiations.

1. Know Your Accessible Vendors; Apply Competitive Pressure

Are you able to research and find ways to keep competitive pressure on your accessible vendors? Your I&O department will be.

Should there be just one vendor at your price point, or offering what your company needs, we find ways to leverage the options offered by that company.

2. Make or Renegotiate Deals at the Right Times

We also research the optimal moments to purchase and renew, ensuring that your company takes advantage of varied elements of market leverage.

As an illustration, we ascertain when incentives to sell run high—typically at the end of a given vendor’s fiscal year. And we ascertain when useful extras are most likely to become accessible.

3. Optimize Your Inventory

Avoid purchasing excess products to obtain “bundle” discounts. This leads to overspending on licensing, support, and subscription fees. Only buy what you'll use in the coming year.

If you already have extras on the shelf, we can speak with a vendor that might accept swaps, rather than simply selling you additional needless items to leave on the shelf.

4. Know What Motivates Vendors to Work With You

What motivates a software or cloud vendor to make a deal? Sales quotas, incentive targets? The sales representative may tell you. If not, ask: What technologies are the firm’s executives talking up most? Cloud-based solutions? IoT?

It’s necessary, but not sufficient, to examine the competitive offerings among accessible vendors. It’s also crucial to study vendors' current, medium-range, long-range, and seasonal selling goals. This is the only way to optimally leverage the value your business offers them.

We scour vendors’ financials. We agree with Sacco's advice to listen to the publicly traded companies' quarterly calls. We also keep communication lines open with vendor representatives—not only to scout out new platforms and services, but to stay abreast of the companies’ strengths and vulnerabilities.

5. Don't Let Your Negotiation Team Show Its Cards

Vendors needn't learn who is getting your business until the deal is signed.

Moreover, offering one point of contact will suffice. Your negotiators need delegated authority. Be sure vendors cannot circumvent the negotiations process by getting someone else at your company to sign a deal.

6. Avert the Great Deal That Gets Undercut Later

SaaS contracts typically span three years. Come renewal time, switching takes effort, and creates opportunity costs. Vendors bank on this. From the very start, hold your renewal options down to what you first expected—or at least prevent a rise of more than 5% for a multiyear renewal.

Where possible, we advise companies to obtain terms and conditions that stick through the initial term, and beyond. Following the previous five recommendations can increase the likelihood of meeting this one.

7. Identify Extra Costs Up Front

Many companies require a sandbox for testing and development. Most expect a basic support package, too. Need more? Negotiate costs up front. This is a major opportunity to obtain substantial savings.

Insist on receiving a record of all the features you are buying, with actual descriptions of their functions, so that any unexpected changes in the bargain would become obvious. Ensure that the material terms of the warranty stay in place over time.

Rely on Valicom

We focus on examining the vendors and their terms, and managing what your company gets. Ensure full value for the money you allocate to your company's cloud and software assets.

Let’s jump on a discovery call to learn more about your telecom environment and just how much we can save you.

About the Author: Chantel Soumis

Chantel Soumis brings over a decade of knowledge in workflow enhancement through the use of technology. Chantel studied marketing communications and business administration at Franklin University and proceeded to work in a fast, ambitious environment, assuring client delight in the healthcare and pharmaceutical industries. Passionate about project productivity and streamlining workflows through the use of technology, Chantel strives to inform organizations of Valicom’s advanced telecom expense management software and services by mastering communications and messaging while delivering helpful information and supporting resources.