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10
Critical Software Negotiation Tips
By Dennis Sommer (www.dennissommer.com)
Finding the right software to meet your business needs
is the easy part. Negotiating the best software and service
contract can be difficult. Here are ten tips that will
make software contract negotiations easier and make you
more successful.
1. Negotiate with the software vendor at the end of the
vendor's sales quarter or preferably at the end of their
fiscal year. Vendors are more likely to negotiate in your
favor when they are ready to close their books.
2. Negotiations should start during the evaluation and
selection process when you, the customer, has the most
leverage. During this time, start negotiating the price
for the; software, yearly maintenance, training, and services.
3. Negotiate an agreement to put the software source code
in an escrow account. When a software vendor is no longer
willing or able to maintain the software, an escrow agent
is empowered to turn over the source code to the licensee.
4. Negotiate the best Total Cost of Ownership. Evaluate
your cost options for a one year contract to ten or more
years to determine what provides your company with the
best return. Longer term contracts will provide you with
the best negotiating position and cost reductions. Determine
the expected "life of the product" and make
sure the contract does not extend past that expected timeframe.
5. Retaining a software attorney early on in the evaluation
and selection process will reduce risk and effort required
by your internal staff.
6. Define a Service Level Agreement for software support
that covers a schedule of necessary response times based
on problem severity.
7. Understand the vendor's process for support problem
escalations. The process should describe "when"
a problem is escalated and to "whom".
8. Get in writing and understand what is included in the
maintenance agreement. Look for items like; provide bug
fixes, corrections to any programming that doesn't produce
as expected, periodic enhancements, software upgrades,
support team hours (i.e. 24 hours, 7 days a week), support
contact methods (phone, email, etc.), minimum period they
will be supporting the purchased version, minimum allowable
support period.
9. Anticipate future maintenance pricing changes based
on business changes which may cause the vendor to change
the way they price maintenance in the future.
10. Understand your rights as the licensee if your company
merges or is acquired. Will the maintenance contract be
transferred directly to the new company or does the new
company have to renegotiate the maintenance contract with
the software vendor?
About The Author
- Dennis Sommer
Dennis Sommer
is the founder and CEO of Executive Business Advisers,
a management consulting firm specializing in business
growth, sales and profit improvement. www.executivebusinessadvisers.com
Dennis helps companies increase sales revenue, reduce
sales and marketing costs, improve marketing ROI, and
drive new business growth by improving and optimizing
their sales, marketing, company strategy and financial
health.
Dennis is a highly sought after business keynote and seminar
speaker www.dennissommer.com
and author of several highly popular sales, marketing,
leadership and professional development international
articles and books www.advisersecrets.com
.
Contact Dennis at 800-627-6512.
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