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For Sourcing & Vendor Management Professionals

Great Price, Shame About The Deal

Fixating On The Headline Discount Leads Software Buyers Astray — The Best Software Deals Balance Price, Flexibility, And Risk Mitigation

October 25, 2010

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Why Read This Report

If you're a software sourcing professional, your main performance metric is probably pushing you in the wrong direction. You want to get an all-around good deal that includes vital long-term protection for your company, but your executives only care about measurable, short-term savings. But too often getting the best price involves paying too much money too early in the project. There are good reasons why software publishers want upfront payment, such as the financial markets' insatiable demand for recognizable revenue, but that's their problem, not yours. It's more important to retain leverage later, for when you need to persuade the vendor to get a project back on track, cut your maintenance, or accept your interpretation of a licensing policy. Increasingly, savvy software buyers are rejecting this outdated approach and demanding flexible, phased commercial arrangements similar to those that they already get from their SaaS and services providers. You may lose some headline discount by refusing to give in to your sales rep's demands for money down, but it's worth paying that price, in return for a more balanced deal.

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