Global research organization Gartner has outlined measures to help companies and organizations weather the current economic headwinds, which could lead them to renew multi-year contracts, for example for the provision of software and cloud services.
On that occasion, Stephen White, director of advanced analytics at Gartner, said that technology, procurement and procurement leaders should take immediate action to reduce the financial burden on their organizations for six to 24 months, and stressed the need for executives to take action to protect their business. companies to take over business. Financial storms and the foundations of resilience to deal with the unknowns that may arise in the future.
Gartner recommends that companies that may experience cost pressure consider three steps to save money and restructure how they pay for contracts for software and cloud services.
Step 1: Ask suppliers to restructure contracts
Gartner recommends that companies begin restructuring supplier negotiations by setting expectations and communicating them in writing, indicating that they have taken steps to address the financial constraints imposed by the current economic environment and are committed to their existing track record of supplier relationships. Priority for offers linked to contractual terms. Modifications at the negotiating table could include:
- For example, ask for installments or installments every four or six months instead of annual payments.
- Change your usual payment terms.
- Set price limits or caps.
- Extending the fixed-term contract.
- Extend the time it takes to leverage cloud infrastructure and digital platform service contracts.
Step 2: Reduce redundant software and technical support, and defer audits
To achieve the highest level of IT cost optimization, organizations should minimize future payments, as refunds or credits for past payments can be difficult.
These are options to reduce cloud computing costs:
- Check SaaS contracts for potential price cuts.
- Switch to flexible pricing procedures.
- Apply for a free software license or a usage-based license.
- Use financial operations in the cloud to avoid wasting infrastructure and platform services.
- Depending on your usage needs, upgrade to a product version that offers fewer features.
Companies have several options to reduce software costs:
- Temporarily suspend support and maintenance requests.
- End of support and maintenance for redundant software.
- End of support and maintenance.
- Get technical support from a third party.
- lower levels of support.
- Ask the supplier company to postpone the audit.
Step three: build your negotiating power
Sourcing, purchasing and technology managers must be realistic when negotiating with vendors and not compromise on requirements unless they determine an environment that suits their interests. Therefore, be prepared to explain why the supplier agreed to meet the requirements and convince them that it is in their best interests to work together.
Some proven ways to improve your negotiation skills include:
- Avoid making suppliers angry or upset.
- Learn more about the benefits of corporate sources beyond direct revenue.
- Encouraging suppliers to increase their productivity.
- Evaluate competing vendors and available alternatives and options.
- Rationalizing the number of licensed facilities, taking into account competitiveness.