The end of the calendar year may mark a slow down for many, but for the sales and audit staff at many software vendors, it means audit reviews and last-minute deals to squeeze every last bit of potential revenue from existing customers and prospects.
Although Santa Claus is coming to town this month – an audit clause might be even closer! So how can businesses protect themselves, and how can IT staff avoid a most unwelcome gift?
Strength Or weakness? Knowledge brings power
There are two ways the situation might play out: either one of strength, where you can dictate to the vendor your terms, or one of weakness where the vendor holds all the cards and your only strategy is damage limitation.
Let’s consider those scenarios and how to improve your position:
- You are under audit, or an audit letter is winging its way to you.
- You are considering the purchase of new products and technologies from a vendor.
The first scenario is one of potential weakness. The vendor may uncover more about your estate than you know, and you will likely end up owing them significant un-budgeted fees if you are out of compliance.
In the second scenario, you are in a position of strength. That’s because the vendor will want to push a deal through before the end of the year and will be willing to offer you an excellent deal.
But, even then, how do you gauge quite how “excellent” that deal is without a full understanding of your estate?
You can strengthen your position, and you can do that in two key ways.
Apply software license optimisation processes in combination with a powerful software asset management (SAM) solution.
Discover as much as you can about the vendor you are being audited by, or are negotiating with.
So let’s go back to both scenarios.
Scenario #1 software audit
In the best case, even with an audit letter in hand, you can use a SAM solution to gain visibility of your hardware and software estate that will enable you to prepare answers to any questions the auditors may have over discrepancies.
During the process of a software audit, a common strategy of vendors is to offer a compromise, a get-out clause. It typically comes in the form of an offer to purchase new products.
A vendor may allow you to forego audit fees and/ or true-ups if you are prepared to purchase new products. This is where your knowledge of the vendor is a major benefit.
Consider why a vendor does this. It’s not for the good of their health or because they are feeling generous.
Instead it is because new product revenue looks much better than audit revenue when reporting their financial performance. And the best type of revenue is one that is strategically important to the vendor and its investors. For example, for SAP, this technology is S/4HANA.
Scenario #2 – adopting new technologies
Although you are in a position of strength and you are targeting a vendors’ year end, the best way to get the strongest deal is by knowing your own IT estate inside out.
By adding a layer of SAM intelligence, this allows you to understand precisely what is being used and what is not. You can understand how effective the current licensing models are for the configurations that you have.
Remember, you may get a fantastic discount on new software license purchases, but a discount on unnecessary products is like a great deal on a present which is never opened – a waste of money!
Armed with this knowledge and understanding how crucial this time of year is for the vendor, you can negotiate a far stronger deal with long-term effectiveness.
No time to relax
We’ve considered the scenarios where you have reason to be actively engaging with a vendor, but what if your organisation has no reason to do so right now?
Well, consider yourself lucky because you have a little more time to build a position of strength. But do not take a back seat, do not put your feet up and do not relax!
If you want to see results for the forthcoming year, then you should be working on it now.
Vendors’ year ends are peppered throughout the year and audits can come at any time So do ensure you know when they are.
If your organisation knows precisely which licenses and entitlements it has for each and every software vendor on its books, how that software is being used and whether the license is optimal in each and every case, it is effectively untouchable.
Vendors are less likely to audit you because they won’t get any return on their investment and you can negotiate with the greatest efficiency.
Sourced by Dan Kirtley, product marketing manager at Snow Software