SERIES: Software Mainenance Costs – Pop The Bubble – Part 2

View Part 1. View Part 3.

QUICK AND DIRTY APPROACH

This is not an optimal approach, nor a recommended approach, but it’s definitely better than sitting on your hands and doing nothing. If you haven’t the time or resources available to take a more comprehensive approach, and you don’t want to hire a third party for assistance, this is probably your default option. Remember, each day that passes without your re-negotiating your maintenance expense obligations means wasted dollars. Doing something, even a crude something, is usually better than doing nothing.

STEP ONE – Open up your dusty folder containing your license agreements.

STEP TWO – Skim through invoices for each license agreement and order the licenses based on maintenance cost outlay, most expensive to least expensive.

STEP THREE – Find your sales rep’s contact information for the first license and contact the sales rep’ by phone.

STEP FOUR – While on the phone with your sales rep’, explain your boss’ recent directive to you. You must cut all software maintenance expenses to the bone. Keep it short and simple.

STEP FIVE – Remain silent and let your sales rep’ make the next move.

STEP SIX – Repeat Steps Three through Five for each of your other licenses.

Vendor Come-Backs – In the typical scenario, this will be your first contact with your sales rep’ in several months or even years. Your call will almost certainly catch the rep’ by surprise, and your very direct statement of your purpose for calling will probably put the rep’ on the defensive. Typical come-backs from a rep’ in this context include:

Buying More Time (To Think)
“Well, I’ll have to access your account information and see what I can do. Can I call you back later today?”

“I’d be happy to talk to you about that, but I have a staff meeting in 10 minutes. Can I call you back?”

Appeal To Higher Authority
“I don’t have the authority to change your fee structure. I will have to talk to my boss and get back to you.”

“We’re just a reseller, and we don’t have the authority to change your license terms.”

“I’ll have to talk to the business lead and get back to you.”

Fishing
“What sort of reduction are you looking for?”

“Are you not happy with our maintenance or support?”

What To Do Next – What you do next depends on your stomach for negotiations and your negotiations skills. If negotiations make you squeamish, or you’re just not a good negotiator, you may want to let your rep’ take the lead. Answer the “fishing” questions politely, and move your rep’ toward action. Avoid disclosing the actual percentage reduction you are seeking by saying that you need to “cut expenses to the bone,” or “we need a substantial reduction.” For dead-end (”shut-out”) responses like “have no authority to . . .”, ask for the contact information for the person who has such authority, contact that person, and start a new Step Four. However you do it, get your rep’ or your new contact person to make the next move; that is, offer up some reduction in your maintenance expense. You’ll then have your starting point for additional downward movement. A first offer is rarely a final offer.

If you are generally comfortable with negotiations and at least somewhat skilled, you may want to drive things a bit further on your own. Express your urgent need to get something done (blame your boss), cite to your company’s limited use of support services and the fact that you haven’t installed an update in over three years (if both are true), mention the fee reductions your other software vendors are providing (if you’ve already made some headway with your other vendors), and so on. In short, state your position for lower fees and negotiate.

Outcomes – As crude as this approach is, chances are good that it will produce at least some expense reduction with most of your vendors. Again, it’s not an optimal approach, but it’s usally better than doing nothing.

Cautions – Remember, when it comes to re-negotiating software maintenance fees, you don’t get an unlimited number of kicks at the cat. In fact, all other things being equal, you should count on getting only one kick at the cat during any annual period (perhaps even longer). What this means for you:

Don’t Use This Quick and Dirty Approach If . . . – Don’t use this less-than-optimal approach to re-negotiation if you plan to exectute a more considered approach in the future. Focus instead on developing and executing your other approach now. Stop talking about it and get it done.

Any Approach – Regardless of what approach you use to re-negotiate maintenance fees, be fair. Don’t lie, don’t be a bully, and maintain respect. In most cases, you’ll need to maintain a working relationship with your software vendors and their sales rep’s, and over-the-top negotiation tactics will usually damage your credibility and sabotage your short- and long-term and objectives.

Don’t Go to the Well Too Often – After you’ve hammered a few times on your deployed software vendors for reduced maintenance fees, you will have reached a saddle point at which your fees are probably commensurate with your use of support, updates, etc. In other words, you’re paying fair value for what you are receiving. Stop bugging your vendors at this point. Unless your circumstances have changed, don’t go to the well again. Usually, at this stage of the game, your next option is to drop maintenance altogether.

Take me to Part Three: Reducing Maintenance Costs – Plant a Seed Approach

Related posts:

1. Reducing Software Maintenance Expense – Plant a Seed Approach
2. Software Maintenance Costs – Pop the Bubble
3. Software Warranties – Make Some Hay
4. Software Asset Management – Hard Alone But Afraid To Go Outside