Best Practices For SVM Software Selection And License Negotiation
At Forrester’s Services & Sourcing Forum earlier this month in Chicago, Patrick Connaughton and Duncan Jones led a breakout session on common problems with software selection, organizing the selection process, and negotiations strategy. Below are some tips from clients and vendors at the session.
One client recommended plotting the next 90 days of negotiation milestones in order to plan sourcing’s involvement. This helps you structure your approach so that you close the deal at the point when you have the best leverage. Formalizing and documenting the process also helps you demonstrate to the business that you did your homework.
Get involved before the vendor selection phase
Establish the value of what you do and let the business know how you can help throughout the process. Bring information the VPs don’t have, like benchmarking. The earlier you are brought in, the more you can plan ahead, and the better your understanding of what is important to the business before you meet with vendors.
Focus on differentiators
The RFP process is so mature that vendors often respond in a way that highlights themselves without showing any real differentiators. Don’t just use packaged, boilerplate RFPs — pare down the criteria to reflect what’s important to you.
You have more leverage as an early adopter, and when replacing a competitor
In both cases the vendor is likely to send the A-team and to concede higher discounts. The vendor may see you as a potential marquis client that can act as a reference and even speak at events.
Look beyond the typical references
On the flip side, try to talk to references who haven’t already spoken to a dozen prospects for the vendor and participated in webinars.
Don’t skimp on the TCO analysis — but don’t do it too early either
One client lamented at a software selection that overlooked some necessary hardware upgrades. However, a TCO is very time consuming, so whittle the list down to a few vendors first.
Don’t let the vendor entrench itself
When validating your choice via a POC, one client warned against letting the vendor provide services free of charge, making it more difficult to go back on your decision. Although you are evaluating the vendor’s ability to customize and support the software, be prepared to pay for what it does.
Bring in the hardest to satisfy stakeholders
The software is never as easy to use as the pre sale rep made it seem. Involving heavy users and the harshest critics will ensure everyone buys in.