What negotiation strategies have proven most effective when dealing with major software vendors in today’s uncertain market?
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Major software vendors are taking a difficult stance of nudging and pushing customers into buying cloud and modern solutions as they invested in them. In some cases it does make sense as that might drive up value in revenue or yield etc. In few cases it is simply a transition and we get pushed into it with a little choice. Either they stop supporting earlier perpetual licenses or no new features.
My approach has been measured, asking basic questions and buying in only, if it makes business sense. Else making informed decision of what are we loosing and at what cost.
In doing that, a couple of aspects I learned are:
- Maintaining ongoing relationship with account managers. This cant be at the time of contract negotiation, but recurring.
- If possible, meeting with them in-person has a huge merit.
- I take advise from Gartner analyst in the specific area for competitive knowledge.
Assuming an existing supplier, the most effective is the hardest - to be prepared to walk away to one of their competitors. There are normally signs such as a previous contract that was less beneficial than expected or negative feedback from industry peers for the vendor to give time to create an exit plan.
Almost the opposite but buying more from an existing supplier can be highly effective in negotiations, allowing for greater volume discount and especially if adding entirely new services. Though this may just make negotiating the next renewal harder - see first paragraph!