Negotiation of prices and terms for software licences is one of the most complex IT negotiation disciplines. Anyone who has purchased software will be more than aware of that. Particularly when it comes to the major providers (Microsoft, Oracle, SAP, IBM, CA and Software AG etc.), it is a discipline you should invest in.
The difference between a good and a not-so-good negotiation result can be a fortune.
When should you negotiate software agreements?
You can always renegotiate the price and terms of a software agreement.
Of course this applies when concluding an agreement and in the context of planned renegotiations, but not solely in these situations. You should negotiate if you have identified overpayment and/or if you have suddenly been presented with price increases. You should negotiate in cases when you intend to purchase a lower or higher volume of the supplier’s products in the future. The same applies if you are going to consolidate several agreements, if you are going to separate parts of the organisation or if you are going to merge others.
In all respects, when it comes to software agreements, you should seriously consider negotiation assistance. There is usually a 70-90% mark-up on software, so there is a big difference between a good and a bad agreement. Specifically, this means that the buyer is often presented with complicated licensing rules and a lack of transparency, when the other party outlines prices, discounts and terms.
We have more than 10 years’ experience in negotiating software agreements, often worth more than DKK 100 M. We have helped numerous C25 companies and major public organisations to negotiate and renegotiate their largest agreements.
Negotiation assistance is always in the hands of a team led by one of the company’s most experienced consultants. Our negotiation approach is based on the Harvard model, but we have adjusted and refined it in the light of our extensive negotiation experience.
A classic negotiation assistance process features a number of phases, in which we can support you throughout – from preparation to the actual negotiation.
Experience shows that a proactive, data-driven approach to negotiation yields the best results. So, during the preparation phase, we establish the necessary data base – prices, terms, consumption and business value – and benchmark the realistic target zone.
We devise an overall negotiation strategy, which includes, for example, a mapping of realistic alternatives, the other party’s interests, and a simple work plan for the negotiation: principles, sequence, timeline, and role allocation.
In the actual negotiation process, when you sit down at the table with the other party, we provide constant negotiation assistance: either from behind the scenes or as a physical representative at the negotiating table. We continuously assess and calculate offers and proposals from the provider, ensuring that you are fully prepared throughout the process.
- Overall negotiation strategy
- Ongoing negotiation discussion and feedback
- Trained negotiation team
Would you like to know more?
Frederik Bastkær Christensen
Partner & Managing Director
+45 23 60 34 05