Over the last few weeks, several Forrester IT sourcing clients have asked us to review and comment on special proposals from SAP that offer an attractive discount and contractual flexibility in return for a large, irrevocable, multi-year commitment. It appears that several SAP sales teams are trying to achieve their annual targets by enticing customers to place firm purchase orders (PO's) now for products and users that they won't need until 2011 or later. This could be a great opportunity for buyers to take advantage of SAP's tough year and get an exceptional deal on software they were going to buy anyway. However, there are risks from over-committing ahead of your roll-out plans, as I explained a couple of years ago in my report, Avoid The Hidden Costs Of Shelfware, which is still as valid today as it was when I wrote it.
The most obvious risk is that delays in the implementation process will mean the licenses you're forced to buy in years 2 and 3 will sit on the shelf for a while until you are ready to deploy them. Worse, you'll be paying maintenance on that shelfware, which could soon cost you more than the extra discount you got on the initial deal.
Just like a fruitcake is the holiday gift that no one wants, a license compliance audit is sure to be at the bottom of everyone’s wish list this holiday season (except for maybe the vendors). What do you do if you find this lump of coal in your stocking? How do you resolve the issue as quickly as possible? And no, re-gifting is not an option!
Sourcing executives are setting their strategic direction for 2010 and beyond and increasingly asking: “What role should we play in SaaS buying decisions?”
Many sourcing executives see SaaS coming into their firms under the radar screen, through divisional, try-and-buy style purchases, often low-cost enough to go largely undetected – at least in their initial phases. However, they also see SaaS’ growing importance as a key strategic initiative in their firms and the trend towards SaaS becoming ubiquitous in the larger software market. Therefore, they want to better understand existing SaaS solutions that are being used in their firms today – where, when, why – and also understand when it makes sense to proactively push SaaS as the best overall solution based on factors such as TCO, flexibility, usability, IT staffing considerations, and upgrades.
At Forrester’s Services & Sourcing Forum earlier this month in Chicago, Patrick Connaughton and Duncan Jones led a breakout session on common problems with software selection, organizing the selection process, and negotiations strategy. Below are some tips from clients and vendors at the session.
Plan ahead One client recommended plotting the next 90 days of negotiation milestones in order to plan sourcing’s involvement. This helps you structure your approach so that you close the deal at the point when you have the best leverage. Formalizing and documenting the process also helps you demonstrate to the business that you did your homework.
Get involved before the vendor selection phase Establish the value of what you do and let the business know how you can help throughout the process. Bring information the VPs don’t have, like benchmarking. The earlier you are brought in, the more you can plan ahead, and the better your understanding of what is important to the business before you meet with vendors.
Focus on differentiators The RFP process is so mature that vendors often respond in a way that highlights themselves without showing any real differentiators. Don’t just use packaged, boilerplate RFPs — pare down the criteria to reflect what’s important to you.
You have more leverage as an early adopter, and when replacing a competitor In both cases the vendor is likely to send the A-team and to concede higher discounts. The vendor may see you as a potential marquis client that can act as a reference and even speak at events.
Rosslyn announced today the launch of its free SaaS automated spend analysis tool, RA.Pid. This effort to bring spend analysis to the masses enabled by a SaaS deployment model is long overdue. Traditionally we see spend analysis solutions deployed as license based solutions installed locally on site. In today’s economy, companies are looking for alternatives to that model and Rosslyn really hits the mark with this offering. What was previously reserved for the most advanced procurement and sourcing teams is now being packaged into a simpler to use and setup solution -- enabling less advanced companies to get their feet wet. Click here to see the press release.
We followed up with some key questions you are likely asking about this free solution. Here are the highlights:
Forrester: How long can the user stay active without a fee? What other terms and conditions should we know about? Rosslyn Analytics: Organizations can use RA.Pid for free as long as they want. The only caveat is that one person per company is permitted to use RA.Pid for free. Subsequent corporate licenses cost $150 per person, per month.
Forrester: Are there any limitations on the volume of data? Number of uploads? Interfaces? Rosslyn Analytics: The data limit is 100 MB. This means a user could upload as many completed data templates (as many times as they want) up to this limit.
Forrester: Who owns the data? For example, does Rosslyn own it and could you in turn use it for benchmarking with other clients?