|
By Cara Garretson
Here's a bit of good news amid the recession doom and gloom: Enterprise software is becoming more buyer friendly as vendors show greater flexibility in negotiating prices, simplify licensing schemes, and beef up service and support.
In a report dated June 1, analyst firm Forrester Research says software vendors are becoming more value-oriented and are putting customer satisfaction higher on the priority list. This assertion comes from following twelve enterprise software vendors' practices during the fourth quarter of 2008 and the first quarter of 2009 and comparing them to earlier practices.
While vendors haven't dropped list prices, and in fact are talking about raising them, software licensing contract terms are becoming more favorable for customers in all geographies and vertical markets regardless of company size, says R. "Ray" Wang, the Forrester analyst who wrote the report.
And the savings could be significant.
"There aren't hard and fast rules [on discounts], but for enterprise applications it's much greater than the 50 percent we have all assumed," says Wang.
More flexible negotiation strategies mean software vendors are offering perks to potential customers, such as bundling related software, in attempts to sweeten the pot. Vendors are also reducing the amount of complexity in their sometimes dizzying pricing to make software easier to buy, Wang says.
One example of a vendor becoming more value-conscious is enterprise software giant SAP's April announcement to outline key performance indicators, or KPIs, designed to prove the worth of its premium Enterprise Support service, and also to help customers reduce the cost of operating its software.
"We are convinced that SAP Enterprise Support delivers unparalleled value to all customers and, as a demonstration of our commitment, we will provide tangible reductions in their operational costs on a defined schedule," said Léo Apotheker, co-CEO, SAP AG, in a prepared statement.
Despite this buyer's market, Forrester warns that getting a good price on software is only part of the equation; vendors must deliver on choice, value, and predictablility, too.
In today's unsure business climate, Forrester recommends the following steps to successfully negotiating software deals:
—Assemble the right team
—Identify key business drivers behind the purchase
—Align with the software ownership life cycle
—Determine the adoption plan
—Align contract strategy with production adoption
—Identify main leverage points
—Finalize the negotiation strategy
While the recession has played a large role in convincing enterprise software vendors to modify their licensing practices, new technology trends are also a factor.
"New deployment technologies like SaaS (software as a service) and virtualization apply pressure to vendors to keep costs in check," Wang says.
However, buyers shouldn't feel that they'll be in the driver's seat indefinitely. Customers should look to include verbiage in their new contracts that protect against licensing changes software vendors might want to make once the economy rebounds, Wang says.
—Cara Garretson is a freelance technology and business writer based in the Washington, D.C. area.
Only registered users can write comments.
Please login or register. |
