Any end user organization using software has to deal with software agreements. You’re probably in the same situation. But how do you make sure that you make the best out of them? Quite often the most important terms and conditions are overlooked and there is a large focus on getting the highest discount. Sometimes this is caused by lack of time during the negotiations, by the fact that you are not aware of what is and what is not possible with a software publisher or because you are not fully aware of the consequences certain terms and conditions may have for your organization in the future.
Think for example about the moment your organization may be merging with another entity or you are divesting a specific part of your business. What about the support maintenance fees you are paying in the next coming years or the next time a publisher starts an audit? How do you determine the best approach?
In this article we will focus on the main challenges you will most likely be facing when trying to negotiate a software agreement and why it’s good to have an expert to help you.
The bigger the software publisher, the more often we see that end users expect that they are not able to change anything in the standard terms and conditions offered by the publisher. But when it comes to your specific situation, those standard terms and conditions may not be fit for your business needs. There are typically a number of drivers that should be taken into account when you start to negotiate: what type of company are you (e.g. public sector organizations usually have a different need than commercial organizations), what type of licenses/subscriptions are you planning to purchase, what is the total deal volume (from a CAPEX and OPEX perspective), what is the total term you are able and willing to commit to, what are the countries you are planning to use the software for, etc.
Not looking into the specific terms and conditions of your agreement may result in issues at a later stage. Think for example about the situation in which you may have multiple subsidiaries across the globe. Are these legal entities (directly or indirectly controlled by your organization) defined correctly in your “Customer Definition”?
Many of the contractual terms and conditions can be negotiated, depending on the type of agreement, the total deal value and the software publisher you are negotiating with. Many companies believe that they can deal with this themselves, but how often does someone deal with one and the same publisher? Once every 2-3 years maybe. Our experience and practice over the last 30 years has shown that procurement and sourcing members usually don’t know what they don’t know, meaning that it’s no wonder that they are not able to negotiate the best deal for your organization.
Negotiating a (renewal of a) software agreement requires specific knowledge and experience. The complexity of the software licensing field (which is always a mix between legal and technology) has its own specificity. Your legal department is most probably not having the skills and knowledge to understand how the software is going to be used in practice, your technology department knows what software programs they want to use and for what purpose, but lack the legal skills to understand how this is written down in the agreement and your procurement/sourcing department is dealing with a single software publisher once every 2-3 years. Hence the reason why the involvement and support of a specialized licensing expert from a consulting company pays off. There is a large variety to choose from but pay attention to their experience and proven results before making a decision on whom to engage with.
Our negotiation support services can help you make better deals for your company. We advise you how to get the terms and conditions that best suit your needs, depending on the situation:
Software agreement negotiations – we can help you to make the most out of a standard agreement, so that you avoid any worries regarding the deployment and usage of your licenses or subscriptions going forward. Do you need to negotiate the renewal of your agreement? Here is some useful advice that you might want to consider.
Software maintenance negotiations – we can help you to identify all the cost savings opportunities you have both on short and long term.
Negotiating with a software publisher is not a walk in the park. An individual who has the right knowledge and experience in software licensing, software renewals, software negotiations and contracting can cover all the tricky situations that you may be confronted with in the future, to fill in your blind spots.
We helped a large amount of our customers with their agreement negotiations. Don’t forget that you don’t know what you don’t know. Ask the experts!
We helped a large amount of our customers with their agreement negotiations. Don’t forget that you don’t know what you don’t know. Ask the experts!
