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Vendor Bender

By Scott Hirsh

When preaching the gospel of using third-party tools to manage systems more effectively, I am often met with the response, “That’s easy for you to say. We can’t get approval for the purchase of those expensive products.” Well guess what? I couldn’t get approval for most of those tools either. And getting approval for management products will always be a challenge, no matter how robust the economy or how much management now recognizes the importance of technology to the bottom line. So through sheer necessity I learned how to get what I needed either free or at a steep discount.

Where to begin? For starters, we technical types have a well-deserved reputation for being terrible negotiators. For some reason, the same people who are creative, savvy technical problem-solvers tend to be passive victims when it comes to business problem solving. Perhaps it’s the human element of negotiating that gives us pause: aversion to confrontation, not wanting to be perceived as rude or unreasonable. Whatever the case, I can state authoritatively that not all customers are treated equally. And it is by no means as simple as the biggest customers getting the best deals (although that does happen). As a customer, my budget was miniscule. And yet, I managed to obtain some of the most expensive system management products for free or next to nothing.

If you are one of those who despairs of ever obtaining the tools you know you need for your shop, I will share some of the vendor relationship lessons I have learned during my system management career.

Lesson 1: Everything Is Negotiable

Amazing, yes? Profound, no! Still, so many of us look at a quote from a vendor and take it as cast in stone. If you didn’t know it before, you know it now: Any quote you receive, especially the first quote, can be negotiated. Do not take anything at face value.

Lesson 2: Know Which Battles to Fight

Assuming time is money, good business practice means not wasting time or energy trying to negotiate items that have a low probability of concession. In my experience, support is considered the bread and butter (i.e., predictable, recurring revenue) of most businesses and is never given away or discounted. Likewise, a few vendors have a no-dicker sticker price that is rarely discounted. (Fortunately, these have been among the best HP 3000 third-party software vendors, and their prices are reasonable.)

By knowing that certain negotiations are not going to be productive, you can focus on the areas where your efforts will be rewarded.

Lesson 3: Everyone Has a Self-Interest

You will only get a break from a vendor if there is some kind of reciprocal compensation. As much as you would like to think that you are getting a great deal because you’re a wonderful person, the reality is less flattering. Perhaps the vendor will make up the freebie on support revenue or future upgrades. Or maybe having your company as a reference will help the vendor make inroads into your industry. Whatever the reason, you must keep in mind that in business everyone is in it for themselves. And there’s nothing wrong with that.

Lesson 4: Do Your Homework

For some purchases — used hardware, for example — you are being negligent if you don’t shop around. Like everyone else, I have some sources I prefer. But I won’t get the most for my money unless I get at least three quotes. Many companies have a policy of requiring a minimum number of quotes, which is a good way of forcing you to exercise due diligence. Too often we treat our budget as “other people’s money” and don’t put in the reasonable effort we would if, say, we were car shopping. Make it a habit to shop around.

Some other examples of doing your homework:

• A few years back a certain 4GL company was fleecing users on upgrades during the transition from MPE/V to MPE/XL. Because the upgrade costs were so exorbitant, users compared notes on HP3000-L, among other places. And guess what we learned? The 4GL company was negotiating “for you and you only, today and today only” deals with selected customers. Hey, I want that deal! And, you guessed it, I got it.

• Before adding that extra CPU or upgrade, check with all your vendors to determine whether you’ll be bumped into a higher software tier, requiring you to cough up some money. A real loser for you is to boot up after an upgrade only to be greeted by a license violation message. Forget negotiating under those circumstances — you’re paying list price (if you’re lucky).

Lesson 5: Know Your Leverage

My management did not encourage me to chair SIGSYSMAN or write a system management column because I needed to get out and meet people (okay, I needed that, too). Rather, by developing prominence in the HP 3000 community I also developed influence in the HP 3000 community. And that gave me a pretty big whuppin’ stick to use on vendors.

If you think you have no leverage with your vendors, think again about what it would take to get there. Attendance at RUG meetings? Active participation on the 3000-L mailing list? Contributions to the 3000 Newswire? Whenever you can portray yourself as influential beyond the opportunity specific to your company, you are in a superior bargaining position.

Lesson 6: Timing is Everything

Any sales organization that works on quotas — which is all sales organizations — is sensitive to period-ending dates. Typically, we’re talking quarter-ends here, and year-ends can be even more compelling. It took no genius to figure out that discounts are easier to come by the last week of a quarter than the first week of a quarter. If you can hold out until a period end and then deliver a P.O. as promised, you will consistently get better deals.

Lesson 7: Think Long Term, not Short Term

The HP 3000 community is close knit, and people have long memories. When working with vendors you must do your best to negotiate with fairness and integrity. Stunts like going over a sales rep’s head to her boss or otherwise making her look bad will have ramifications well after the current deal. And vice versa: it took me years — and complete management turnover — before I considered doing business with a company that caused my boss and I grief with senior management. Even if you think you’ll never do business with that company again, note how many reps from one company have surfaced at other companies who are already your vendors.

Consider your vendors long-term business partners. Conducting yourself as the kind of person with whom others want to do business should be a goal in itself. But if that’s not enough, you don’t want to learn the hard way how small a world the HP 3000 community really is. Believe me.

Lesson 8: Leave Something on the Table

This is right out of the negotiating books, and for good reason. There are some who take negotiating to an extreme, not satisfied unless the other guy is left with nothing but his jockey shorts. Consistent with the lessons regarding competing self-interests and long term approach is the concept of “win-win.” Your vendor must make something on the deal or (1) there will be long-term resentment; (2) he will go out of business. If there’s residual resentment, you could find yourself at the vendor’s mercy if you’re ever vulnerable in the future — say, when you remember that you forgot to check about software tiers before your system upgrade. So be a sport and recognize that your vendor needs to get his cut.

Lesson 9: Demand the Respect You’ve Earned

When I was new at my last job, I learned that my most important vendors considered us chumps because the previous regime always paid top dollar. After my paper vendor had a near-death experience of quoting me twice what I paid at the previous company, our relationship improved dramatically and we no longer had to go through an extended quotation mating dance. Once you have earned respect from your vendors as a no-nonsense negotiator you should expect to be treated accordingly. If their first quote isn’t at least decent, they’re not paying attention and are wasting your time. Fortunately, there are always other vendors.

Lesson 10: Creativity Is Critical

Last, but definitely not least! Let’s say you are in need of a management product for your shop and the quote you receive is more than your budget allows. Here are some ideas for you to explore with the vendor:

• Offer to be a beta site. Unfortunately, with “time to market” being so critical these days, we tend to be virtual beta sites without the traditional compensation — or our approval. But if you’re lucky enough to catch a vendor introducing a new product you need (as I was), you should be able to cut a deal.

• Request an extended demo. Often there are limits to what a sales rep can provide in terms of comps. However, you might be able to extend a demo for a v-e-r-y long time, nudge-nudge, wink-wink.

• Offer to write a review or testimonial. Keeping the integrity issue in mind — that you’re not saying a product is great just because you got it free or nearly so — a testimonial is a reasonable quid pro quo. What’s expected of you can vary quite a bit, from writing an article to presenting a paper at HP World. So keep in mind that you will have to “sing for your supper.” Just don’t expect compensation to be offered. You’ll need to ask.

• Demand compensation for referrals. If your referrals result in sales, you should be compensated beyond a hearty handshake. In most cases we can’t accept direct compensation, so ask for product compensation for your company.

• Take a small deal and make it bigger by stretching it over a longer time period. This is an old purchasing trick you read about a lot in the trade rags. You can only afford the small expenditure now, but you’ll agree to purchase more in the next year or two. Vendors like this because it locks in future revenue. You benefit by getting a better deal now.

Nobody has all the answers when it comes to negotiating and nobody always gets his own way. But for those who complain that they can’t afford the tools they need, it’s time to stop being a victim. You can get the tools you need if you just approach this business problem with the same intelligence, creativity and dedication that you pursue your technical problems.

And tell them I sent you.

Scott Hirsh, former chairman of the SIG-SYSMAN Special Interest Group, is a partner at Precision Systems Group, an authorized HP Channel Partner which consults on HP OpenView, Maestro, Sys*Admiral and other general HP 3000 and HP 9000 automation and administration practices.