Buyers Scrutinize SaaS Contracts More in H1 2011, As Deal Sizes Grow

The growing realization for SaaS buyers is that if they overlook the details of their SaaS contracts, chances are they’ll pay for it later. Forrester analyzed the thousands of inquiries we receive every quarter to understand the hot button topics in the SaaS space for the first half of 2011. When it comes to on-demand services, we found that people paid more attention to the following three factors in the first half of 2011 than ever before: 

  1. Pricing and discounts. It came as no surprise that people are most concerned about money and are looking for guidance around SaaS pricing and discounts more than anything else. Many of our clients want to benchmark themselves against peers. For example, one client asked, “Is there some benchmark data to compare pricing on B2C web portal (PaaS or SaaS) solutions?” Forrester’s take? Unlike traditional software, most SaaS pricing is publicly available on vendor websites. However, pricing and pricing models are still in flux for many emerging areas of SaaS. Even in more established areas, like HR and CRM, discounts can range as high as 85% for large or strategic clients.
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Apple's New Leadership and the Enterprise PC Market

No other name in technology carries as much reverence as Steve Jobs. His departure as CEO of Apple combined with HP investigating a spin-off of their PC division has a lot of companies wondering what changes are in store. A few points:

1. In the face of the major market shifts, a strong case can be made for multi-sourcing your enterprise PCs. Recent events highlight the risks that enterprises face -- risk that will be more apparent in 1-2 years. Apple’s product roadmaps have already been planned for the next 15-18 months (depending on the product line), so I don’t expect to see any significant downside for Apple until this current roadmap is past. But when Apple's current roadmap is refined under new leadership, we’ll start to see the effects on Apple’s enterprise strategy. In addition to this news, more certainty exists with HP's spinoff of their PC division, and Dell will show their hand in how they plan to move forward in the face of these developments. The landscape in 2-3 years will be drastically different.  Diversifying your PC suppliers via multi-sourcing can help mitigate that risk.

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Identifying Risks and Opportunities as HP Investigates Spin-offs and Acquisitions

Speculation in the marketplace suggests HP will spin-off their PC business and seek to acquire software company, Autonomy.  As with any major technology acquisition, SVM professionals need to be vigilant in identifying new risks.  Here are some of the things to consider as this continues to develop: 

  1. If you’re in the midst of crafting a PC Refresh RFP, ask how contracts will be maintained going forward in the RFP. The spin-off brings new risk to your HP contracts.  Though no official news release indicate how contracts will be handled, your HP Big Deal letter and enterprise purchasing contracts may or may not remain the same.    You may also want to understand how spare parts will be made available for your HP devices, post-spin-off—will that be through HP?  The new spin off?  I would recommend you also understand any changes to warranties and after-point-of-sale services through the RFP process. 
  2. If you’re a current (or soon-to-be) Autonomy customer, get your licenses in check.  From an audit perspective, ensure you’re in compliance with your licenses before HP targets you.  Though HP may not be as proactive in auditing its customers compared to others, new acquisitions make it more likely for them to take advantage of implementing new licensing schemes—challenging your existing license ownership.
  3. Reach out to your resellers for discounted HP WebOS tablets.  HP will discontinue its TouchPad operations.  Beware--don’t expect that they’ll be able to service them (or provide any OS updates) if you have any issues.

Thoughts On Strategic Partnerships From Infosys Leaders And Clients

I’m in Las Vegas attending Infosys’s Connect 2011 client event, and one of the recurring themes in sessions and side conversations has been the nature of Strategic Partnership. The phrase risks becoming a meaningless cliché, so I was interested to research what it actually means to Infosys execs and clients. I got some interesting, varied perspectives.

A large CPG company’s central IT group described its interpretation in a couple of sessions. It demands, among other things, a strong cultural fit, a commitment to win:win solutions to problems, and regular meetings with partners’ CEOs. This group has 12 “strategic partners” who get a lead role in a specific area, but may not even be considered in other areas, even though they have good solutions in their portfolio. I might argue the semantic point about whether this means they are merely ‘important, at the moment’ rather than ‘strategic’. However, the key point is that the two parties’ commitment to making the partnership work creates a better, stronger commercial framework than any legal agreement could deliver.

Raj Joshi, MD of Infosys Consulting, described his group’s Value Realization Method (VRM) that formally tracks each project’s expected business benefits from the initial project business case through design and implementation and onto ongoing value delivery. Joshi stressed the importance of shared incentives, such as risk/ reward sharing commercial models, in ensuring projects’ success.

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Licensing With The Frenemy -- Exploring An IBM Software Audit

I’m conducting research for our sourcing clients about the right approach to take in IBM software audits. In combing through Forrester’s IBM software sourcing inquiries, I’ve found that most sourcing professionals don't realize they have a licensing problem until it's too late — and they’re struggling to get quick information and guidance. 

Some of the problems are vendor-driven:  Market expectations keep the IBM Software Group on a high growth trajectory, and license audits contribute to their objectives. Others are client-driven: IBM's clients should expect audits that reconcile license discrepancies but then struggle to leverage resources to remain compliant. Regardless of the underlying reasons, these audits often end up in the same place — clients who are drowning in contract administration and compliance costs and frustrated with their IBM relationship.

As part of my research on the auditing process, I’ve been interviewing some former IBM sales reps, and I’m seeing a few trends. Some of my preliminary findings indicate: 
 

  1. Sales teams often don’t have control over who’s audited  . . . We spoke with one former IBM sales rep who noted that sales reps don’t have much control over auditing activity. He told us the audit department creates an audit letter and a spreadsheet of clients, pushes that to the sales team, and asks them to find the audit targets. This rep indicated that the auditing team asks sales to continue to call into this exec until they agreed to the audit, at which time it’s handed back to the audit team. So your rep may not be deeply connected to the process behind your audit. 
     
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Why Do We Let Software Sales Reps Behave Like Tourist Souvenir Hawkers?

I’ve just had a negotiation lesson from Number-one-Daughter, who has been studying in China for a year. I’ve just returned from beautiful, vibrant Beijing  (北京) where my wife and I met her, to see the city and to help her get her luggage home (which explains the 6 pairs of ladies’ shoes in my suitcase and makeup in my carry-on — at least, that’s my story and I’m sticking to it).

Chinese souvenir stall

Author and wife on the Great Wall of China

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