Let's Make a Deal: Negotiating with IT Vendors

If you work in an enterprise IT organization that's been around for a more than a decade or two, it's a pretty good bet that you do business with one of the so-called megavendors -- IBM, Microsoft, Oracle, and/or SAP. These established vendors have had deep roots in enterprise businesses for many years with ERP systems, databases, and more.

And if you think that your business is under pressure from market and industry disruptors, you should also realize that the same market forces are in play for these megavendors. The cloud has changed their licensing and business models. They are also under strain as these models have shifted, and their sales tactics have shifted, too, as they look to drive upsell revenue. These companies want to increase your spending year-over-year in the cloud with subscription licensing. They have a strategic product set that promotes the sale of other products, too.

Before you head into your contract negotiations with these megavendors, you need to prepare your own tactics and strategies. That's according to Melanie Alexander, a director analyst at Gartner specializing in vendor contract negotiations. She provided some perspective on the best ways to prepare for your negotiations with these vendors during a session at the recent Gartner Data and Analytics Summit in Orlando, Florida.

"Their main purpose in life is for you to spend more money with them," Alexander said. They will want to upsell you to use the full platform -- to get you on the hardware and middleware and application stack, she said. They have a strategic product set and those products help them promote the sales of their other products. They want to get you into their cloud and lock you into subscription pricing. They want you to increase your spending with them year over year.

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