How to negotiate with ERP Vendors
Posted by Glen Mund on Wed, Apr 08, 2009 @ 03:47 PM
How to negotiate with ERP Vendors - Panorama Consulting
http://www.panorama-consulting.com/Viewpoints/NegotiatingWithERPSoftwareVendors.html
Tips For Negotiating With Your ERP Software Vendor
Evaluating and selecting an ERP software package can be an overwhelming task. Hopefully your organization has invested the time to define its key business processes and business requirements as part of the overall evaluation of potential vendors. Assuming you have done this and have selected an ERP vendor, there are some things to avoid during negotiations:
1) Beware of under-estimated implementation costs and durations. At this point in your ERP project, the ERP vendor is still in sales mode, so it's not in their best interest to give you a good sense of what it's really going to take to implement the software effectively. Generally, vendors will omit or underestimate times and costs associated with implementation, internal costs, IT upgrade costs, etc.
2) Don't assume that their first offer is their best. As with any negotiation, software vendors typically start by offering software at their list price and reducing from there. Vendors have several ways to make money on a deal, whether it be through ongoing maintenance, professional services, and training, so you should not be afraid to ask them to be more aggressive in their pricing, particularly as it relates to software license costs.
3) Leverage competing offers. We see too many companies zero in on one vendor without at least receiving proposals and conducting a thorough ERP software evaluation for other potential vendors. With competing offers, you are able to ask the preferred vendor to meet pricing offered by a lower-cost vendor or to make concessions based on any functionality gaps or concerns.
The ERP evaluation and selection process isn't simply about choosing software. It's also about procuring the best software at the best price possible and developing an implementation plan that will make the ERP project successful.