Rentokil Initial has become one of the largest users of Google Apps, rolling out the cloud-based office suite to 35,000 users globally. Rentokill plans to use Google to consolidate 40 email systems including open source products and Microsoft Exchange, into a single email system. Last year, Rentokil Initial deployed handheld computers. It installed a new network in the UK and is in the process of virtualising servers, rationalising data centres, standardising its PC infrastructure and moving to a single mobile telephony provider. The company aims to rollout Google Mail to 35,000 during 2010. Earlier this year, manufacturer Valeo became the first company to use Google Apps globally after it signed a deal to use the SaaS for three years.

While these two deals may only show as a miniscule dent in Microsoft’s vast sales revenues, it is the thin end of a growing wedge of businesses that are looking beyond Microsoft products for robust global apps and solutions. Alternative products ramp up competitive pricing pressures on Microsoft and give users a chance to demand better deals and better pricing. Silver Bullet Associates encourages everyone to watch this space; Rentokil and Valeo will not be the last to replace Microsoft products for alternative solutions.

Microsoft’s CEO Steve Ballmer has ruled out reviewing its user licences, despite acknowledging the fine print and complexity can cause headaches for customers.“I don’t anticipate a big round of simplifying licences. The last round of simplification was done six years ago” he said. Ballmer has also said that the supplier was working hard to ensure the launch of Windows 7 was more successful than Vista. “My hope is that in the first three to six months [after launch on 22 October 2009] any new PC you buy will come with Windows 7. It would be a shame to see people acquire Windows XP machines in 2010,” he said. Whether Windows 7 takes off quickly or stumbles like Vista remains to be seen. It would be nice if Microsoft were to simplify its licencing terms; but don’t hold your breath. And it would be great if Microsoft were to acknowledge their pricing policy was unreasonable too. The next few years will become increasingly tougher for Microsoft as competitive products such as Open Office and Google Apps take chunks out of their revenues. Maybe Windows 7 will be the last great revenue hurrah for Microsoft before a long slow revenue decline sets in.  

According to a survey conducted on behalf of software supplier BMC, the majority of European organisations that have cut cost from IT operations are reinvesting those funds into strategic IT projects. The survey of 300 European IT decision makers found that 60% were reinvesting their cost savings strategically. This makes a lot of sense as strategic projects can pay dividends in helping businesses grow when economic conditions improve. While those businesses that just save money without reinvestment could lag behind when recovery begins. Every organisation is different and what they choose to do with their savings will depend on a number of factors. Reinvestment is one option. But so too is reducing IT costs such as software or hardware maintenance in order to use the savings to save jobs. Mark Bartrick, Managing Director of Silver Bullet Associates says “cutting IT costs is not hard; simply negotiate better deals with your IT suppliers”.

Oracle has blamed falling first quarter sales on the recession, currency shifts and weakness in resellers’ performance. The database specialist posted a 5% decline in revenues to $5.1bn but managed to increase profits 4% to $1.1bn. One example of reseller underperformance is quoted as SAP who is selling fewer databases because its application business is down. New Oracle software licence revenues were down 14% while technology licence revenues fell 19%, and software licence updates and product support revenues dropped 8%. Services turnover fell 18%. Keeping expenses in check was partly responsible for the small increase in profits. According to Oracle their sales pipeline continues to grow, although closing rates are more conservative. The firm reckons sales will drop 1% to 4% compared to a year ago. So if you have to negotiate a new or renewal deal with Oracle this year, then make sure you squeeze their sales rep (or their reseller) for every last drop of discount before you sign. They are under pressure to keep revenues moving forward, and it’s your money that they need to keep their commission stream flowing! If you are unsure of how to negotiate with Oracle, then let Silver Bullet Associates guide you through their sales maze.

Many software vendors are now embracing licencing metrics that incorporate the requirements of a virtual environment. Oracle, Microsoft and IBM are just three of the many vendors who have accepted that they have to move away from tying their software licences to physical devices or processors. Licencing software in a virtual environment based on processors can add up fast so it’s a good idea to look at negotiating software licences based on named users.  Data volume is going up fast for many organisations which in turn requires more processors, even though the number of actual users may stay the same or actually be decreasing. And one other point; Silver Bullet Associates is aware that some suppliers support contracts are not written to incorporate virtual licences and could cause a cost problem when the supplier insists the client revert the support contract from virtual to physical licenses before addressing the original issue.

Every contract requires renegotiation when there are changes to your business environment or the contract reaches a renewal point or the supplier is taken over or merges with another entity. And renegotiation always throws up opportunities to improve the pricing and/or terms of the deal in your favour. Mark Bartrick, Managing Director of Silver Bullet Associates is a keen advocate of making the most out of every renegotiation and has saved his clients significant sums of money when contracts are renewed and renegotiated. Mark offers a few guideline below:

1/ Prepare well before contacting your supplier. Be clear about what you need and don’t need in any new contract. What has changed since the last contract was signed and what needs changing to mirror your current and future circumstances? Discuss the contract and its scope with your internal stakeholders. Define what you need, what you must have and what you’d like to achieve during the up-coming renegotiation.

2/ Within your organisation, agree who is going to do what and when. Define your timelines and allocate responsibilities and ownership. Get the right people involved who can make decisions. Be clear what your budget is at the outset. 

3/ Communicate clearly with your supplier; explain your expectations in terms of timescales and lines of acceptable communication.

4/ ‘What’s in it for me?’ Try to identify an incentive for the supplier. Don’t simply demand a price reduction with nothing in return. Find out what motivates them at the moment and see if you can find some common ground.

5/ Be clear what your walk away point is and what your alternatives are before commencing the renegotiation.

6/ If you don’t ask, you don’t get. It never hurts to get a ‘no’. But it always hurts to find out after the fact that you could have got a better deal if only you’d asked.

7/ If you have any doubt about the renegotiation, or are unsure whether your IT supplier is giving you their best deal, then contact Silver Bullet Associates and get an independant unbiased view from the renegotiation experts.

Negotiating with a single source IT supplier can be very challenging. There have been several threads on this subject recently on LinkedIn and many suggestions put forward as to what buyers can do to mitigate the issues and still come out with a good deal. Combining some generic suggestions together with our own thoughts, we have listed below some tips  and tactics that may help you when faced with this situation:

• Timing of the deal. Find out when your supplier’s financial year end and quarter ends are. Even single source suppliers have sales targets and deadlines, and this can be leveraged in your favour. 
• Identify what goals your supplier’s salesman may have. It might be a certain level of spend, or a deal cut in a certain way that maximises their commission. Find this out and you may get some leverage over how much you spend and how.
• Maintain a competitive spirit even though there may be no other option but to buy from the single source supplier. You always have the ‘do nothing’ option up your sleeve. But there may also be different ways of satisfying your business requirement without having to buy anything from the supplier that can be used to leverage a better deal. 

Some people call negotiating with a single source supplier a ‘buyers nightmare’. It need not be if you follow the above ideas and think outside the box.

Do you need interim IT Procurement help? The skills and expertise offered by temps and professional contractors is highly valued by a wealth of organisations and many of them see the engagement of short-term procurement expertise as a key element of their recruitment strategy. Whether you are looking for temporary IT Procurement to help to plug a gap in your resources, or want to bring in external expertise to give your Technology sourcing team a short term boost during an important procurement project, Silver Bullet Associates can help. www.silverbulletassociates.com/our-services/need-interim-help/

The financial advantages of engaging interim help:

• Employers only pay the daily rate
• No employer liability for NI or employee benefits such as holiday pay, absence or retirement funding
• No long term contract or commitment
• Minimal notice period

Interim IT Procurement Managers  

We have interim IT Procurement Managers who are seeking flexible hours in exchange for their highly sought-after skills. All of our interim managers have already carried out assignments at other Silver Bullet Associates clients – they are all highly experienced and knowledgeable IT Procurement professionals.

The advantages of hiring an interim IT Procurement Manager

• Hit the ground running
• Knowledgeable about IT Procurement techniques and best practices
• Experienced; been there, done that
• Highly specialist and proven negotiation skills
• Can act as a procurement/negotiation coach guiding your staff, or as totally ‘hands-on’
• Focused on helping you deliver your procurement projects and saving you money

BMC Software has announced the acquisition of middleware management vendor MQSoftware. The deal is expected to expand BMC’s management platform to enable clients to manage their entire mainframe infrastructure. The company claims that the unified offering will reduce costs by up to 30% by eliminating monitoring silos for transactions and messaging middleware; reduce downtime by 90% due to improved performance monitoring; and boost staff productivity by 40% by simplifying management tasks. BMC recently posted better than expected financial results, with a 3% rise in revenue to $450m. Software licence sales rose nearly 12% to $167m to boost net income to $82.4m, up from $1.2m for the year ago quarter. Although BMC has been active on the acquisition front, this is its first deal that will impact its mainframe business. Mark Bartrick, Managing Director at Silver Bullet Associates says “Mergers and Acquisitions are common in the IT industry, and with the difficult economic conditions driving down share prices, some IT suppliers have become attractive acquisition targets. Such consolidation can be a good thing and can help to eliminate some elements of cost. But be aware what’s in your IT Suppliers contracts regarding Mergers and Acquisitions and ensure you have control over what any acquiring supplier can do to your support charges or terms. Don’t get caught out with a sudden price hike or a cut in support services/hours”.  

Server and Storage virtualisation often coincides with consolidation projects to reduce infrastructure and IT management costs. The underlying objective is to use IT infrastructure to its maximum, to improve performance and to introduce total flexibility as to when and where the business needs to have resources available. If you are planning a project involving virtualisation or have already undertaken a virtualisation exercise, then we’d like to hear from you. We are keen to see whether the claims of savings and operational benefits made by the likes of Gartner and Forrester are true or not.