How to be a Smart Buyer of IT - DAC Beachcroft

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How to be a Smart Buyer of IT

Published 1 October 2015

When financial times are tight - and in 2015 it looks like they are going to remain that way for some time yet - it is only sensible that businesses review areas of cost savings within their operations, but without losing competitive advantage. Information technology is one such area - if you know where to look.  

So, how does an organisation get to be a smarter buyer of IT? 

Well, firstly by taking stock of what the business has already got and then preparing just that little bit more, when buying in the future.

Don't fall into the ‘out of sight, out of mind’ trap

Be prepared to invest some time in regular software asset management as it can often reap substantial rewards. Are you paying for too many licences, given the number of actual users of the software? Is the scope of those licences wider than that really needed? And, more importantly, are you paying for licences for software that isn’t even being used any more?  

What about software maintenance charges?

Some risks are just not worth taking but it is worth checking how many times support calls have been made to the supplier in the last 12 months. Assuming support can be easily bought on an ad-hoc basis, are you paying high annual maintenance charges for a stable software product that isn't business critical and is used by only a few end users anyway?

Get the price broken down into its constituent parts so that you are clear as to what each part really costs

Unless you are dealing with a relative newcomer to the market, most licence fees are largely profit, so you should always be prepared to negotiate on these. There is often a percentage link between the licence fee and any software maintenance charges, so you could end up with a double saving. Be careful when negotiating savings on professional services fees though - you should always think value rather than cost. Why? Because you'll often find that you end up with precisely what you've paid for; and poor quality services, or rushed implementation projects, are counter-productive.

Timing, too, can play a part

Find out when your supplier's quarter/year end is. Negotiations around that time are likely to be particularly fruitful. Similarly, any information on how and when the salesperson gets paid could prove to be very useful!

Finally, just how important are you to the supplier?  

It's not always good news if they badly need your business, it could mean that they are financially unsound. However, it will almost always be a distinct advantage in negotiations if you represent their first foray into a new sector or market, or would otherwise be a valuable reference site.

Notwithstanding current economic challenges, 2015 doesn't have to be a year in which businesses hold off from investing in information technology - rather, it represents a time of opportunity. It's a time for making savings by getting one's "house in order" as well as an opportunity to get a bit more for less (or, at the very least, more for the same!).

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