It’s been a while since my last batch of top tips for negotiating better software deals. So here are a few more:

1/ Take your time. Don’t be rushed into any decision. A few extra days now to make sure things are right can save you months of wrangling later when things go wrong.

2/ Concede only slowly and in small increments.

3/ Trade off stuff; if I give you X will you give me Y.

4/It’s not just about the price; look for other value that might be worth more.

5/ Listen more effectively. Listen for nuggets and nuances; they all count.

6/ Communicate clearly and confirm everything in writing.

7/ Set the Agenda for every supplier meeting

8/ Know when to stop negotiating

9/ Never negotiate when you’re tired

10/ Enjoy it. Negotiating is fun!

While the overall economy has offered mixed signals lately, many tech companies are reporting a rebound in corporate technology spending. But canny buyers are making best use of more cost effective SaaS solutions. More companies are looking to save money by signing up for cloud computing services like those offered by Salesforce.com, in which the company hosts client software on its servers and makes it accessible over the Web. That saves companies from having to invest in major server and disk equipment as well as the associated in-house support staff. 

Taking up customre references and getting comfort from the fact that someone else has ‘been there done that’ plays a significant role in the decision-making process of software  buyers. As a result, most software suppliers are keen to add new names to their reference lists. Whether the software vendor is a new start-up or global giant they are all especially keen to get advocates for new products , new software releases or when moving in to a new vertical markets.

By offering to serve as a reference you can often use this a leverage to negotiate yourself a better deal. And the amount of the extra discount will depend on what you are prepared to do as a reference. Taking a few phone calls in a year doesn’t take up too much time, but the logistics of having potential clients come on site can be quite time consuming and can significantly interupt your day-to-day job. You should insist your software suppliers reward you well for the time spent helping them sell their products to other potential users. Extra discount is one option. Free stuff is another, ie training, education, consultancy etc.

And finally, beware the software contract that already includes a clause that states you will be a reference site. Some vendors hide these clauses in their contracts as if it is a standard element of every deal; it’s not, it has value and it’s totally negotiable!

While it won’t save you money when negotiating the initial contract, asking your software supplier to remove the audit clause from their contract could well save you a bunch of money down the line. An audit clause gives your software supplier the right to audit your usage of their software at any time. Time and again software suppliers have audited users and found their actual software use is above the contracted level and so more licenses (and money) is demanded. My blog last week reminded you to check usage rights to avoid non-compliance. So during contract negotiations, always ask that the supplier remove the audit clause. Some will and some won’t. But if they do then you might well save some money and some compliance embarrasment in subsequent years.

Software license types and definitions vary from one vendor to another. Failing to clarify what the license types are and what the definitions mean in your software contract can cost you money! Before you sign on the dotted line, always ensure you have clarified and understood what it is you are buying and make sure that license types and definitions are clearly stated in the software contract.

Software suppliers are adept at auditing users and finding businesses where their software is being used in breach of the license types or definitions in their contract; the net result is usually an unexpected and unbudgeted invoice arriving on your finance directors desk asking for payment for the actual software usage. If you don’t want to get caught out, then make sure you know what you’re signing when a software supplier presents you with a license contract. Look particularly at the number of users allowed, the type of users (ie, named, concurrent, employee, cpu, affiliate, professional, lite, etc etc), the geography of use (ie, on one site, across multiple sites, in subsidiaries, outside the UK, etc), and also clarify the definition for each license type (ie, what does ‘concurrent’, ‘cpu’, ‘lite’ etc actually mean?). Also check to see what happens if you were to outsource your IT function; does your software contract allow free and easy transfer of use to an external party?

A little time spent up-front prior to signing a contract can save you a lot of wasted time and money later!

It looks like email could well be the next battleground for Microsoft and Google to fight over market share.

As organisations evaluate e-mail strategies over the next five years, Microsoft and Google will compete for the bulk of the market, says analyst Forrester Research. This is due to cloud-based e-mail being the cheap entry point to a deeper and more profitable collaboration deal for vendors. Microsoft and Google will be happy to outbid each other to win your e-mail business because they know there’s more money to be made in conferencing, team sites, videoconferencing and social software down the line. Cisco, IBM, Microsoft and Google are rapidly approaching feature and price parity in their e-mail offerings.

Research from Forrester found that in 2009, 76% of US employees in small companies used Outlook for e-mail. However, Google has been building its direct sales organisation and partner channel aggressively over the past three years – claiming more than two million businesses use its Google Apps Enterprise Edition product.

So anyone facing the prospect of signing another 3 year Microsoft Select or Enterprise Agreement may want to consider their options more thoroughly The future is cloud and the question is only when do you go there, not why.

Last week a new client of ours was asking about software license usage rights. Specifically they wanted to know what was the difference between a concurrent user and a named user. The simple answer is that there’s a lot of difference, including the price per user. The definitions of usage terms vary between suppliers and failing to get usage terms clarified can cost you money when the supplier finds you are ’under licensed’ after only a year or two. If you’re buying software then clarifying and agreeing usage rights should be a part of your negotiation strategy.

Confirm the numbers and types of users you have. Then discuss different licensing options with your software supplier. Find out which license type best suits your business. It’s not just your employees that might need licensing; do you plan to use external consultants or your outsourcing supplier to help implement the solution, will you be allowing your agents or customers web access to do self-service activities, etc etc. And note; you can mix and match usage types which will bring your sofware costs (and pro-rate annual support) down. 

And some licensing is based on servers/CPU’s; so make sure you clarify what happens if you decided to upgrade or change server type during the life of the software.

And find out where you can use the software; UK may be fine for most of your business, but what about that subsidiary abroad?

Software suppliers have developed an array of ways to catch you out. So as the saying goes: caveat emptor -  buyer beware.

IT cost savings come in many forms and here’s one that caught my eye the other day.

HSBC has saved more than $1m in energy costs after rolling out technology that shuts down 300,000 PCs during evenings and weekends. The bank is implementing the shut-down system across its international network, eventually reaching all 8,000 offices in the 88 countries it operates in.

The technology, called NightWatchman from supplier 1E, saves data and closes applications before shutting down PCs. The bank is one of the biggest in the world and says it keeps costs down through “ruthless” standardisation of its IT across the company.

Matthew O’Neill, head of group communication systems and support, said, “A key part of our desktop strategy to minimise total cost of ownership is through ruthless standardisation of our environment. We deploy a single Windows image to all of our desktops worldwide and ensure that all additional solutions we provide are globally scalable. Within this environment, we are responsible for establishing all of the desktop settings, including our global shutdown policy, to ensure that this is adhered to across the organisation, maximising the energy savings.”

Well done to HSBC; saving the planet and the pennies at the same time!

SAP has reported software and related service revenues of €2.3bn in preliminary financial results for the second quarter of 2010, up 16% compared with a year ago. Software revenues alone were up 17% to €637m and total revenues were up 12% to €2.9bn. Profit after tax was up 15% to €491m.

Bill McDermott, co-chief executive of SAP, said large, mid-sized and small enterprises are continuing to invest for growth across many industries

SAP also announced that it has completed the cash tender offer for all outstanding shares of common stock of Sybase. Sybase will operate as a separate company under current chief executive John Chen and remain focussed on its core database and information management business, SAP said.

In its business outlook, SAP said it expects software and software-related service revenue for 2010 to increase between 9% and 11% excluding the contribution of Sybase of six to eight percentage points.

Not a bad set of results and one indication that IT spend is on the up again after many months of crushing recessionary austerity.

CIOs and IT directors are attempting to slash IT maintenance costs, as a matter of urgency, to free up their budgets.

On the one hand, hardware and software maintenance represents the single largest IT expense for many organisations, but it’s also a huge source of revenue for IT vendors. This conflict presents many problems for IT consumers.

Gartner has recently produced a list of recommended negotiable items:

1. The right to regular, appropriate, predictable updates to software products
2. The right to clearly defined response times and IT support levels based on application criticality and other business factors
3. The right to reasonable, predictable percentage ranges for yearly maintenance fee increases – or decreases – as well as long-term caps on increases in maintenance costs
4. The right to end or change support at any time for products that are not in use
5. The right to reasonable, predictable levels of support throughout product and contract life cycles
6. The right to reasonable, clearly defined maintenance and support for legacy systems

As a starting point for any contract negotiations, this is a good way to get started.