It’s mid-May and as you prepare to celebrate Cinco de Mayo, you are in the middle negotiating your Unlimited License Agreement with Oracle. You had an opportunity to certify out with enough licensing to cover your install base for an estimated three years, but now you don’t think you have time. Are you simply going to get the best deal you can and pick up where you left off in three years? As you go through the process you feel confident that you can get a dollar figure that will work for you and probably make you look great to your boss. There is the usual back and forth with Oracle Sales with a commitment to close this deal in May. Your final number is $2M less than the original offer and you think “I can give myself a high five for getting such a good deal!” You then take the renewal to the CFO, who hasn’t been involved in the negotiation, which you both breathe a sigh of relief for not having to go through the certification process and getting a “the best deal possible.”
But what if.. just what if you and the CFO take a step back and think for a moment about all that has taken place. Why was it so easy to get all the contracts renewed for a lesser price and why the focus on doing this deal in May? Have you been overpaying this entire time but just not asking the right questions or looking at the contract the right way? Then you think, if it was this easy to get this why are the vendors so willing to reduce the price in order to get the deal? You might tell yourself you are growing and need unlimited licensing, but you have already been in that contract for three years. Do you really have the data that supports locking your firm into paying another potentially $8M over three years when the reality is that you don’t have the need? If the CFO dug a little deeper (with the help of licensing experts) they would find that the $8M contract was probably not needed at all and that the remaining $2M in support renewals could be reduced over about a 12-18-month time frame. Think you would still get that high-five then? We had a contact in an IT Sourcing position recently that even though they believed that it was possible, their culture would not embrace the concept and would rather pay the ULA agreement and said, “the devil you know is better than the one you don’t.”
Result: Another huge unneeded contract signed out of nothing but fear. It is time to start fearing the CFO and the CEO for not making good financial decisions instead of fearing a vendor who only cares about making revenue and taking yours.
Happy Cinco de Mayo – you may just need that drink!
