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How To Buy Enterprise Software (Without Getting Scr3w3d) - Blog #4 of 4 in Series

Updated on April 12, 2013

Do Your Homework Before Buying Software


Introduction

In this part of the series, we get down to some nitty-gritty details of how vendors try to scam extra money out of you. Armed with this information, you won’t be fooled. We also offer a sample list of vendors to get you started researching which is best for your needs.

Tricks Vendors Use to Disguise Overall Costs of Enterprise Software:

A. Vendors, like roofers working on your house, will sometimes slow down their work pace once they’ve got you committed to using them. They may seem quick-working at first, but then various “delays” and complications will arise. To avoid this scam, negotiate cost in terms of the complete, finished implementation, rather than hourly rates. Also set a maximum cost the vendors must not go over in terms of consulting costs.

B. Beware of vendors that set initial costs low or make them free. You may think this low-cost initial implementation will lead to a fast return-on-investment (ROI). In fact, the company has you locked in and knows you will probably stick with them now. Then the company adds on high prices for ongoing maintenance and consulting. Negotiate the long term service prices so they are comparable to the early-stage, cheap prices the company offers to draw you in.

This trick is also used in another manner. In this case, the vendor offers a cheap price to set up basic functionality, but leaves out the fact that you will have to pay for expensive additional modules later to get complete functionality.

C. Another trick vendors use is to offer a steep discount – say 50% -- on their product up front. Then the vendor jacks the price back up after the first year, and you pay heavily for a hosted product. You are locked in by then, since switching to another system and transferring all your data would be an even worse headache in most cases. In addition, vendors might go back to the higher listed price when offering secondary services like new modules or user licenses.

In summary: keep in mind and negotiate for the entire overall cost of the product and services over time. The initial estimates should, for example, cover the Total Cost of Ownership over the first couple of years. Keep in mind that you will probably have a higher cost for continuing support later. Then make the vendors commit to the prices you specify. If they balk at making a commitment to price -- in writing -- walk away.

Various costs for which you should plan:

1. Cost of the software

2. Cost of the hardware

3. Cost of any additional modules

4. Cost of implementation

5. Cost of importing data from previous system

6. Cost of time your staff needs to adjust software, if possible

7. Cost of consulting to adjust software if your staff cannot do it

8. The cost of training all users of the software

9. Cost of support and maintenance for the software

Partial List Of Enterprise Software Vendors To Vet:

This is merely an example list of vendors to get you started. Do more research to find one suited exactly to your company’s particular needs.

· Sugar CRM

· SalesForce

· Numara Software (now part of BMC)

· ServiceNow

· Right Now Technologies

· EnterpriseWizard

· Frontrange

Conclusion

Preparation is key. There are no shortcuts to getting a good deal. Do your homework up front and don’t take any costs for granted, and you will be rewarded on the back end. Get all vendor promises in writing. Good luck!

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