IT contract negotiations are based on a foundation of data on existing hardware and software assets; specifically, on quantities, versions, locations and utilization of those assets. If – as often happens – that foundation is shaky going into the negotiation, then the resulting agreement is likely to be seriously compromised as well.
Bad asset data results from a lack of controls and processes around tracking when new assets are added and old ones removed – which happens constantly in today’s dynamic enterprises. In these environments, a wide variety of factors and triggers can generate errors and slip-ups in asset tracking. For example, we’ve observed situations where an RFP used in a vendor selection included an inventory of hardware items, many of which were about to be decommissioned and removed. As a result, the RFP event and following negotiation was based on obsolete information.
The implications of inaccurate data are significant. For one thing, as a customer, knowing exactly what assets you have, how they’re being used and what you’re paying for them puts you in a much stronger position to negotiate. The alternative – to rely on your vendor to tell you what assets you have – weakens your negotiating leverage and sends a clear signal to your account team. If they see that you don’t have a clear understanding of your assets, you may be tagged as a good candidate for a software audit, since you’re more likely to be non-compliant and therefore liable for significant fines and penalties.
About the authorSteve has over 25 years of technology sourcing, consulting and procurement management experience.He has developed and implemented multiple cost savings projects across multiple IT/Telecom sub-categories including but not limited to Laptop/Desktop Hardware, Servers, Mid-Range Hardware, Storage, Telecom Hardware, Enterprise Software, and Application Software
