Vendor Negotiation

Client Situation

The client is a large financial services company. The client utilized multiple data centers to deliver its services. As a mature Information Technology organization, Best Practices were evident throughout most of their software vendor stack. Those best practices had resulted in lower costs, even while enduring annual CPU upgrades. However, one specific vendor needed a focused approach in order to eliminate future upgrade pain. The vendor wanted to increase an expiring ELA by over 100%.

ISAM Solution

ISAM’s Vendor Negotiation was selected because of our unique approach to negotiation that uses a combination client value, benchmarks and alternative analysis to triangulate costs and identify a contract bottom-line price. We utilized our GreenBook database to provide comparative costs among similarly sized data centers and to identify product alternatives for each incumbent product. The values of the alternatives were compared to arrive at a lowest cost solution as well as a solution based on the most prevalent products in the industry. Occasionally the data pointed back to the incumbent vendor with a price model that would provide upgrade relief and a lower risk solution.

An interactive report was delivered that identified several scenarios and the steps necessary to negotiate the lowest possible cost for the required business functionality. Although the client preferred to negotiate on their own, ISAM was prepared to provide a full service solution. In the end, ISAM provided valuable negotiation support.

Results

The incumbent vendor reviewed the list of potential alternatives and the client’s analysis provided by ISAM and decided that lowering its costs to the client was their only option. Instead of increasing the ELA by over 100%, the vendor reduced the costs of the ELA by over 20%. The client received the benefit of lowered costs, future price protection and the functionality maintained by retaining the incumbent vendor.