Archive for April, 2009

Oracle buys Sun Microsystems

April 29th, 2009

Oracle Corporation is to buy Sun Microsystems in a deal worth $7.4 billion. The deal comes a fortnight after talks between IBM and Sun collapsed, following IBM’s decision to significantly lower its offer. It will give Oracle access to Sun’s strategically important Java and Solaris technologies, which underpin the Oracle database. Negotiation tip: Try to spread your spend across the new IT supplier landscape of the ‘big four’ of IBM, HP, Oracle and Microsoft to increase competition and to give your leverage at the negotiation table.

How to negotiate anything

April 27th, 2009

I was asked by a client this afternoon to give him some quick tips on negotiating the best deals. He has just taken on a new role which will mean he is negotiating face to face with IT suppliers for the first time. Previously, he had an IT Procurement person doing the negotiations for him, but his Company has made the Procurement person redundant as a cost saving measure. Now I’m not sure getting rid of IT Procurement people at this time is a cost saving measure; it’ll probably end up costing the Company more when they overpay for IT stuff in the future due to lack of IT Procurement skills in-house. But anyway, in answer to my client’s request for some quick tips, I said there are three main ways to get the best deals: No.1: Ask for a better deal. Don’t be shy; just ask. If that fails, then No.2: Ask again. And if that fails, then No.3: Ask again but ask louder this time. Now I know this is an awfully simple way to approach negotiations, but as a rule of thumb it’s a great way to get things started. And not just in IT but when ever you want to negotiate a better deal for anything ; new TV, car, house, pay rise, golfing weekend away, what ever. Ask, ask again, and then ask louder. Remember, you don’t get if you don’t ask.

The challenge for IT Procurement

April 23rd, 2009

Under pressure to reduce expenditure and find cost savings, IT Procurement departments need to find new ways of removing cost without damaging the business. The challenge is to find where IT costs are not directly supporting demonstrable business benefits. Some examples include eliminating unnecessary projects that won’t add real value to the business, delaying new system purchases where a ‘make do with what we’ve got’ attitude is acceptable, and to operate at the leanest staffing levels without  losing a skills base that will be required when the economy turns around. The ideal scenario is to find projects that improve efficiency, not reduce effectiveness. According to various surveys and validated by many Silver Bullet Associates clients, operational IT budgets are being cut between 6% and 10% this year. So IT Procurement have their work cut out. One project we see underway in several of our clients is reviewing whether any software or hardware costs are tied to the number of employees or users; if they are then there is an opportunity to re-negtotiate with the IT supplier and re-set the costs at a lower level. Another popular project is to undertake a full asset management review to make sure no-one is paying for what they don’t have or don’t use. And price benchmarking is increasing as IT Departments search for negotiable savings opportunities.  All you have to do is to dig deep enough as there is gold in them hills (of IT contracts).

IBM Sun still talking?

April 16th, 2009

News and rumour from the USA sggests that IBM is ready to resume Sun takeover talks. Ten days ago negotiations broke after the two companies supposedly failed to agree on a price and other terms of a proposed acquisition. IBM apparently would go no higher than $7 billion, which Sun saw as under-valuing a business with $2.7 billion reserves in cash and short-term investments. In an indication of what the market is planning should Sun fail to find a buyer, Dell has launched a marketing offensive against the company with a campaign to offer Sun customers “an immediate path from legacy data centres to more open, flexible standards-based technology.” This may well throw up some interesting cost reduction opportunities for canny negotiators; either by swiching from Sun to a lower priced Dell alternative or by using Dell as a threat to encourage Sun to reduce their existing prices. What ever happens, it will be an interesting period ahead for Sun users.

Is the IBM-Sun deal off?

April 6th, 2009

According to US news agencies, takeover talks have broken down between Sun Microsystems and IBM,  with the two companies failing to agree on a price and other terms of an acquisition. Sun’s negotiators have apparently terminated IBM’s exclusivity agreement, opening the company up to merger talks with other parties. Analysts have suggested Japanese server maker Fujistu could make a move, being the largest OEM of Sun’s Solaris operating system. Other potential buyers could include Hewlett-Packard, Cisco or even Dell. Whatever the eventual outcome, Sun finds itself in desperate straits, having lost nearly $1.9 billion in its last two quarters and so far this year cutting headcount by 2,800 employees as it tries to pare down overheads to balance its declining sales revenue. With this developing situation, anyone looking to buy Sun in the next few weeks and months should be careful about what kind of deal they enter into. They should also be wary of any long term contractual commitments that may need to be honoured by any organisation that ends up buying Sun.