Lecture circuit speakers talk a lot about win-win negotiating, but win-win may sound like a fairy tale to any storage administrator who has negotiated contracts with vendors.
Well, fairy tales can come true. It can happen to you if you're creative and smart. Here are some tips and strategies that can help you negotiate win-win deals with your vendors.
Evaluate and document
- Put it in writing. Once you know what your storage needs are, write them down, says Bill Peldzus, storage architecture director for the consulting firm Glasshouse Technologies Inc. Detail what your current environment is, what you hope to achieve and your anticipated future needs. Get down to the nitty-gritty, spelling out the performance, return-on-investment (ROI), total cost of ownership (TCO), support and frequency of upgrades that you must have.
"If you don't understand and don't have in writing what you need, you are going to confuse the issue during negotiations," Peldzus says.
With a written document in hand, your decision team is ready to ask vendors if and how they can meet your needs.
- Make basic queries to narrow the field. Peldzus recommends asking vendors short, detailed questions that demand simple yes or no answers. "If you don't ask for concise answers to your questions about what they have to offer, you are going to get white papers and sales materials," Peldzus says.
- Create a written request for information. Commonly, buyers of large storage systems send vendors a detailed request for proposal (RFP). The RFP spells out your storage needs, and how you want the vendor to satisfy them, according to Peldzus.
"The larger and more complicated the investment and the more broadly the product will be used, the more important an RFP becomes," says Anthony Hill, chief technology officer of Golden Gate University in San Francisco.
- Be sure to ask technical questions in the RFP. Sometimes technical questions are left out because high-level executives or analysts, and not line-of-duty IT managers, write the RFPs, according to Danny Wall, administrator for Health First Inc., a Brevard County, Fla., health care organization with 6,000 IT users.
- Don't go overboard with RFPs. They're a lot of work and can take on a life of their own, Hill says. For some storage purchases, he uses less formal proposals and doesn't create RFPs. "It depends on the size of the investment and extent to which the investment will be used broadly across the enterprise," he says.
- Get concise pricing, not ballpark quotes. Being able to compare line-item prices vendor by vendor puts you in a position of power when you negotiate, according to Peldzus.
With line-item pricing, "you'll do a better job of not buying what you don't need and not getting something you want because you assumed it was in the bundle," Hill says. "Vendors may resist that, but stick with it."
- Think beyond pricing. Creative negotiation shouldn't focus only on price. You don't want cheap; you want value, Hill says. He added that storage architectures and SANs are new to a lot of organizations, so negotiate for a strong package of supporting professional services. Storage monitoring services and extended warranties may add to the cost, but can be very valuable.
Validate vendors' claims
Once you've compared bids from several vendors, you can narrow your choices to two or three. That's when you can really get creative in your negotiations.
- Let vendors compete for your business. Let the vendors know they are in the final running, and then let the negotiations begin. "When you negotiate with them, play them off of each other," Kerns says. That will help you see which vendors are flexible and willing to go the extra mile for you.
- Verify vendors' claims. Vendors make many claims about their products. It's up to the buyer to validate them, and a good vendor will help the buyer do just that. Here are three ways to make sure the claims are true:
1. Ask vendors for custom reports on the performance, ROI and TCO of their storage systems in your environment, our sources advised. Keep in mind, Hill says, that "vendor supplied reports make interesting reading, but you can't rely on them completely."
2. Ask for several customer references. When you do, make sure that the customers are not bound by confidentiality agreements. Ask tough questions, but expect some bias, Peldzus says.
3. Be wary of vendors who won't let you test the product in some way. Not being allowed to test a product in a lab or your own environment can often be a deal-breaker. "What you learn in the testing phase can shorten your project life cycle," Hill says. Tests can also prevent major losses, says Wall, who's tested many products that failed or struggled in his IT environment.
So, you're heading for the win-win situation with a vendor contract meeting all of your needs and conditions. Now, you need to prepare to be a winner in a losing situation.
- Get it in writing. Don't do business with a vendor who doesn't quantify, in writing, support levels, basic maintenance services, such as product replacement and all the deliverables that make it possible to fill your needs.
- Be wary of software escrows. Software escrows are overrated, Hill says. Software escrows enable a company to use and modify the product if its vendor fails. They aren't that useful for storage software, which is complex and requires vendor support, according to Hill.
- Always have a way out. Don't negotiate a long-term contract. "Long-term contracts are risky because of the fast rate of change in the technology sector," Hill says. Also, put an escape clause in any contract, so that you're not locked in to a bad situation. If you have a way out, experts say, vendors have to work that much harder to keep you satisfied.
About the author: Maxine Kincora is a freelance technology writer based on the west coast. When she is not writing to inform and enlighten the world of IT she acts, directs and writes for the stage.