If you are adding major modules to an existing administrative software implementation, or licensing new software, you can reduce your financial and legal risks by keeping a few key points in mind:
1. Each vendor works slightly differently, with different key objectives, but every vendor needs an agreement that constitutes revenue for their corporation. Without revenue, a contract is not desirable regardless of your willingness to provide cash.
2. Use the vendor legal documents as the starting point for negotiations. For some vendors, this is the only option.
3. Understand that vendors are auditing software contracts on a routine basis. You will want to be sure that you are licensing the proper number of users for each type of license you obtain. Some vendors are more strict than others, but they are all collecting additional user fees.
4. Take advantage of the current business climate to lock-in some long term costs such as software maintenance fees.
5. Take time to understand the vendor that you are working with in order to learn where your leverage might be in an agreement. Is the quarter-end important? Is selling a certain product important? Do they care about selling services?
6. Pricing concessions will vary depending on the total size of your agreement.
7. No matter what, you aren’t going to get all of the decision-makers at the table if you are dealing with Ellucian or Oracle. You may as well negotiate using conference calls and skype. It will save you a lot of time.
8. Dual negotiations are almost never a good idea when you are negotiating with the large vendors. It can make obtaining concessions more difficult.
9. Make your requests specific and complete. Resist asking “for one more thing” too many times. If you do this to Oracle, you could lose the last great concession you just got approved!
10. Do your homework in advance and make sure that you know what is reasonable to expect. You want to ask for everything that you can possibly get approved, and not waste effort on things that are not possible.
Good luck with your next negotiation.
President and CEO
The Tambellini Group and Enterprise Hive