So now we’ve crept into 2011, what plans have you got to ‘do better deal’s this year? One thing I often get asked is what areas other than price should procurement be focussing on when negotiating with a software supplier. Well here are a few tips to get you focussed in 2011:

• Define actual and potential license usage and select the usage terms that best suit your user profiles.
• If looking to rollout an implementation, set a payent profile that ramps up as you rollout.
• Include functional definitions of licensed software to avoid unwanted cost hikes later when the supplier re-names the software and tries to claim it is not a new release but a new product.
• Focus on maintenance protections, particularly the ability to reduce, terminate or park maintenance in a downturn.
• Software suppliers are doing more audits – ensure you have robust software asset management to avoid exposure.
• Check invoices and make sure they match your contractual expectations.
• Some suppliers (such as Oracle) rarely change contract terms and conditions during a negotiation. But they are very flexible on price and discounts; so focus your negotiating time where it will bear most fruit.

So there you go; welcome to 2011. And I make no apologies about the last bullet point above; sometimes it is all about the money, so go for it!

And if you think we can help you in 2011, call or email us.

Happy New Year.

Mark Bartrick

Customer Relationship Management (CRM) is one of the fastest growing sectors of the computer software industry. In order to gain a competitive edge, companies of all shapes and sizes are looking for ways to improve the way they market, sell and provide services to their customers. Many are turning to CRM software as a tool that will enable them to more effectivey manage their customer and prospect relationships before, during and after the sale. Based on our experiences of seeing many business buy CRM, we have compiled a short list of 7 common mistakes that can be made when considering which CRM supplier to buy from:

1/ Selecting a new or very young solution provider with little or no track record of success. Even if their product looks amazing, steer clear unless you can afford the risk of it all going wrong.

2/ Not knowing your business requirements before inviting CRM suppliers onto your premises to bid for the contract. You should analyse and document clearly what it is your business needs in terms of information acquisition, inputs, outputs, and processess before starting to talk to potential suppliers. And it’s a good idea to use your own requirements analysis to help build a Tender document. And never let suppliers or any of their so-called partners or consultants with overt/covert affiliations to the supplier help you write the Tender document.

3/ Not knowing where your CRM supplier might store your data (assuming they’re offering a hosted or Software as a Service (SaaS) solution). Many suppliers use a thrd party to host your data and you should check into their track record for performance, availability and reliability.

4/ Not knowing how scaleable your CRM supplier’s solution is. You’d be surprised how many CRM solutions have been bought only for the client to find that the solution is not scaleable when they see sudden growth or acquire a new business and look at integrating the extra data on their system.

5/  Not considering back-end integration. While this may not have appeared on your first CRM ‘wish list’, ensure you spend time checking that your preferreed solution will integrate with your back-end processes (ERP, Accounts etc). As a minimum, make sure your CRM supplier offers an application programming interface (API) that enables integration. 

6/ Selecting a supplier not a partner. A partner will priovide you with a proven implementation plan and best practices to ensure that your realise maximum value from their solution. A supplier just wants your money and once you’ve signed they will suddenly become harder to get hold of. CRM is not a toy nor is it a single moment-in-time event; you will need professional support, training and assistance on a regular basis.

7/ CRM freeware is good. No, it’s not! A world class product from a trusted CRM supplier isn’t cheap and doesn’t come free. Selecting the right solution provider is an important business decision that can dramatically impact the performance of your business for good or worse.

Purchasing IT and associated service agreements can be daunting for any business. Mark Bartrick, Managing Director at Silver Bullet Associates advises businesses to be careful. At a recent IT Forum dinner, Mark was asked to outline some quick tips on how to successfully negotiate IT contracts.

If a business lacks IT negotiation experience, turn to a consultant. 
Consultants like Silver Bullet Associates can save businesses a lot of time and money because they have ‘been there, done that’ before.  

Remember that all contracts are negotiable.
While a vendor might say a client is getting its standard contract, it is only standard because the vendor says so. If you don’t like it, negotiate a better one.

When it comes to pricing, the devil is in the details.
Itemise bundled pricing. Demand clarity of discounting. Spread payments out. Just like working with a home contractor, paying for everything at once can reduce leverage with a vendor if there’s a problem later. Also be sure contract cancellation policies are clear.

Be creative and persistent in efforts to lower prices.
If the sales rep can’t or won’t lower prices, ask who has the authority to do it and go to him or her.

Don’t accept the first price they offer.
You’ve got to push as hard as you can without destroying the long-term relationship.

Consider signing a multi-year contract in certain cases.
For emerging technologies, it may be better to go year-by-year, but for some software, a multi-year contract makes sense to get better pricing.

Get information from peers.
Talk to other businesses; compare notes on products and vendors.

Spell everything out.
Although it’s more work, put “deliverables”—specifics of what a product will do at what time—in the contract. It can even include consequences if the products don’t perform as expected. A service-level agreement might say, for example, that for every hour a server is down, the vendor credits the client money.  

Mark Bartrick, MD at IT Negotiation Advisors Silver Bullet Associates says “end users approach the buying process in many different ways”. Some opt for a single supplier – the so-called “one throat to choke” strategy. Others buy from multiple suppliers to keep everyone honest. Most feel the multi-supplier approach is the way to go, but it’s a slippery slope. How many suppliers does it take before the pros outweigh the cons? Having too many suppliers on hand can dramatically increase cost of management and reduce overall efficiency. Negotiating a better price is always a balancing act. Suppliers often give deeper discounts to those who buy more of their stuff. So, while negotiation power can be improved with competition, actually buying from many suppliers can limit volumes and therefore discounts over time. Bids should be competitive, and exit strategies considered, but it makes sense from a pricing perspective to pool purchases with a smaller number of suppliers once the negotiations are done. No two environments are the same, but a good rule of thumb is to have no more than three different suppliers for any given product or service to keep costs under control and minimize complexity.

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”.

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.

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”.  

According to Gartner, business spending on security software is increasing despite the economic downturn. Bucking the recession, growth of 18.6% for worldwide security software sales in 2008 to $13.5bn shows that security remains a priority for CIOs and IT security managers. Data security, compliance, privacy and increasingly sophisticated and targeted cyber attacks are fueling the growth of IT security software spending. Security firm Symantec continues to lead the market with a 22% share, followed by McAfee (10.9%), Trend Micro (7%), IBM (5.1%) and EMC (4%). Competition is fierce in this market and also having a whole raft of smaller vendors nipping at the heels of the largest vendors gives negotiators plenty of scope to play one vendor off against another. If security software is on your shopping list for 2009, then take the advice of Mark Bartrick, Managing Director of Silver Bullet Associates and make sure you use competition as leverage. 

How can you ensure that your IT supplier is offering you their best deal and best prices/discounts? How do you now if they are giving you value for money? How do find out if they are already over-charging you for the products and services you have installed? According to Mark Bartrick, Managing Director of Silver Bullet Associates, Price Benchmarking is the simple answer. Many canny buyers get independent help to price benchmark Supplier’s proposals prior to signing, and they also insert clauses in their supplier’s contracts to say that they can undertake further price benchmarking exercises if they feel they are not getting value for money. They key for any buyer is to obtain independent advice. Make sure the price benchmarking company has no formal or informal ties to any IT Suppliers or you may find that their advice is tainted, skewed and unbiased. Some Industry Analysts receive significant revenues from Suppliers and have to tread a fine line between what they can and can’t say to their clients. You should ask any negotiation advisor or price benchmarker whether they are truly independent. If they are not, don’t hire them. Don’t hire a fox to look after your chickens!

Welcome to the first blog post of our new look website.

At the end of 2008 we thought the Silver Bullet Associates website needed to be freshened up a little. So we started 2009 with a blank canvass and by adding to some of the best bits from our old website, we’ve created this new one. And as time goes on we will be adding and developing this website still further so that we can communicate more fully about what we do here at Silver Bullet and highlighting some more of our clients savings success stories.

Many thanks to the guys down at Attitude Design who have helped design and develop the site for us. 

So check back soon for more of our latest news, tips and ideas that might well help you help you negotiate lower IT costs for your organisation in 2009 and beyond.

Mark.