When is an IT cost reduction not an IT cost reduction?

I had to laugh the other day. IT cost reduction comes in many forms; one of which popped up when we were questioning a well known software supplier about a proposal they had produced for a client of mine. To the comment ‘your proposal doesn’t explain whether these are list or discounted prices’, the supplier replied by saying ‘they’re neither list nor discounted prices’. Once we had stopped laughing the supplier clarified by saying that the proposal included ‘special prices that bear no relation to their own price book or to their current list prices’. They had simply bundled the software licence costs with the implementation services and the on-going maintenance costs, and had then taken off an arbitrary discount off the whole lot. We then insisted that they break down the bundled costs and show itemised list prices, discounts and net prices for every product and service. Unsurprisingly, this revealed that they had varied discounting with some items discounted aggressively and some items remaining at or near list price (the latter of which no doubt gave more commission to the salesperson at that particular moment in time). Suffice to say, itemising allows everyone to see how a deal has been shaped and enables good negotiatiors to attack both the detail as well as the total cost number.


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