Tips to Negotiate a better deal

When in market place, we all love to negotiate and get the best deal – isn’t it? So the same holds true for any startup and SME when they are out in the market to get their enterprise software. An enterprise software is a must have for the entrepreneurs running their businesses, and if dealt properly it could come at a discounted price. And every penny saved is of huge worth for a startup or a SME.

Business is always about negotiating terms!

Since, these software represents a long-term investment for most of the companies, utmost care should be taken to analyse the best fit for company’s needs, else going forward it would add on to the incremental cost. Also, one should have a basic understanding about the pricing factors of these software before opening the negotiation, such as –extent of customisation needed, number of user licenses, installation and maintenance of the software, after sales service and support.

Following are some of the dos and don’ts for negotiating a better deal:

Get Prepared

Before selecting an enterprise software, the very basic thing to be done is to have a clarity on the functionality and features that your firm would require. This assessment will help you to avoid buying in excess and procure only per project or application basis.

Timing

Start negotiating atleast six months in advance. Vendors would analyse the purchase intention and accordingly come down on cost slowly. Also, senior management needs some time to go through the agreements and sign on dotted lines for approval and procurement to happen. Purchase cycle should be chosen in such a manner that fiscal year-end discount could be obtained.

Understanding Licenses

Thorough knowledge of software licensing should be there in the negotiating team. A clear understanding of the T&C should also be there, like transferability, maintenance fee and any other future purchases. Understanding the various aspects of ULAs (Unlimited Licencing Agreement) are also vital, in order to find the proper fit for particular type of organisations.

Flexibility and Centralization

Licensing Agreements should be flexible enough to upgrade the software version, increase or downsize number of users etc. Flexibility will be able to accommodate future anomalies. Also, software purchase policies should be centralized in order to control cost, standardise and remain organised.

Over and above these, the final SLA should be reviewed and ratified by a lawyer to check the legal perspective. At the negotiating table, one should come prepared and negotiate for value first. Thorough understanding of vendor background also helps a lot. Some additional pointers to keep in mind:

• The software licenses you are buying shouldn’t expire if the firm gets acquired or merged with some other entity.
• Better to keep provisions for external consultants to access the software, if need be. Else it would amount to extra cost.
• Take a commitment of fixing bugs if it emerges in the agreement tenure
• Negotiate for a free upgrade of the version purchased, whenever it is available

How do you negotiate for your enterprise software? Do share with us.