Archive for July, 2009

Do you stay or walk away?

July 27th, 2009

One of the basic rules of negotiation is to be very clear about what your ‘walk away’ position is. It is rare indeed that you enter a negotiation knowing that there is no alternative but to get the deal done right now at any cost. There is always some flexibility on both sides. And as an IT buyer, you need to be very clear about your alternatives which often include competitor offerings as well as a ‘do nothing’ scenario. Sometimes, when an IT supplier is playing hardball and is not offering a clearly competitive price or demonstrable value for money, then as a buyer you need to have agreed with your IT stakeholders where you draw the line between doing a deal at a reasonable price or walking away if the suppier doesn’t step up to the mark. Some IT negotiators feign ‘walk aways’ to test a suppliers resolve. But canny suppliers have seen this tactic so often and if they’ve done their homework they will know that it is purely a procurement play and not a real issue. Sometimes you do actually need to walk away and stay away. It sends a strong message that you won’t accept unreasonable deals. So always prepare, plan and define your walk away point before engaging with your chosen supplier.

Oracle 40% price hike

July 20th, 2009

Looking at the most recently published Oracle price list, Silver Bullet Associates has spotted that some of Oracle’s products have leapt in price by as much as 40%. Processor licences for the company’s diagnostic and tuning packs, as well as a database configuration management pack, are now US$5,000(£3,040), up from $3,500(£2,130) in 2008. The first two products are meant to help database administrators target and resolve performance problems. The latter tool is used for a range of tasks, such as tracking database configuration changes and ensuring policy compliance. Just when the credit crunch is really biting, it sometimes beggars belief to see vendors upping prices. And any increase in license prices will also have a pro-rata increase in their annual Support/Maintenance costs. However, remember that these are price negotiation starting points with nothing to stop Oracle offering extra discounts. And let’s at least give Oracle credit for providing a price list that we can pick over. Most other software vendors don’t.

How to spot troubled suppliers

July 13th, 2009

IT Buyers must look out for early warning signs if they are to mitigate the risk of suppliers going out of business. There are usually a number of tell-tale signs, both financial and operational, that indicate when a supplier is struggling. Typical signs include a breakdown in cmmunication, falling share prices and senior managers leaving. As a buyer, you need to keep information about all your key suppliers up to date. If a business critical supplier gets into trouble, you need to have a contingency plan in place to minimise the affect on your own business if they suddenly go bust. Look out for operational indicators such as when a supplier stops communicating or refuses to acknowledge support issues or concerns. Financial indicators of trouble can include a dramatic or prolonged drop in share price and even whether they are they paying their employees or contractors on time. With the current economic climate, managing supplier risk is perhaps more important now than ever. If the supply chain fails, then your organisation will be at risk too. Silver Bullet Associates, along with all the main IT Analyst organisations such as Gartner, Forrester and Pricewaterhousecoopers, recommend you keep your key supplier data up-to-date, monitor regularly for any unusual financial or operational activity, and communicate regularly with your suppliers to ascertain their financial health.

Worldwide IT spending to fall 6% in 2009

July 7th, 2009

Gartner has revised down since last quarter its estimates for worldwide IT spending in 2009, which it now expects to slide by 6%. Decline more severe than forecast just 3 months ago. In March of this year, Gartner had forecast 2009 worldwide IT spending would decline by no more than 3.8%. Today the market-watchers have said spending will be running at levels which should tally $3.2 trillion by year end, down on last year’s numbers of $3.4 trillion. Continued weak IT spending because of the economic situation combined with the effect of exchange rate movements are to blame.  Hardware will experience the steepest decline in 2009, with spending projected to decline by 16.3%, software will drop 1.6%, and services will fall by 5.6% the analyst house has predicted.

So do you feel sorry for the poor IT vendors struggling to make ends meet? Or are you making the most of these tougher times and negotiating hard with cash-starved IT salesmen desperate to win any business at any cost? “Now is the time to bag yourself a bargain” according to Mark Bartrick, Managing Director of Silver Bullet Associates.

Lloyds Bank makes IT Contractors feel the credit squeeze

July 1st, 2009

An email sent to IT contractors by Lloyds Banking Group in June revealed that their pay is being cut by 15%. According to the Computer Press, the bank told contractors to accept the offer or leave. The email was sent on 19 June and contractors were given until 20 July to accept the changes to pay. One recipient of the letter said, “all attempts to negotiate around the imposition of the cut were met with: ‘take it or leave the bank on notice’.” In the email to contractors the bank blamed the “unprecedented volatility and extreme market conditions” in the UK economy for the cuts. “This adjustment is not a reflection of the perceived quality or value of your contributions to date, but is a response to current market events and Lloyds’ focus on cost management,” it said. Lloyds is also making IT staff redundant. The bank has taken on billions of pounds in loans from the government and has set itself tough cost-cutting targets. So the credit crunch rumbles on and on and on. Still, it’s a great time to be negotiating with IT suppliers. They must be getting used to the comment: ‘This is a tough economy and you’ll need to do better than that if you want us to sign a new contract with you’.