You're negotiating with inflexible vendors for ERP software. How will you secure flexible licensing terms?

Over my 20 years as the ERP Head for a manufacturing company, I've learned to secure favorable licensing terms by thoroughly understanding our needs and setting clear budgets. Researching vendors, comparing terms, and leveraging competition have been crucial. Starting negotiations with less critical terms and suggesting pilot periods for adjustments based on usage have proven effective. I've also requested customized agreements with periodic review clauses. Building strong vendor relationships, maintaining open communication, involving third-party consultants when necessary, and ensuring all terms are clearly included in final contracts have all contributed to successful negotiations.

Start by thoroughly understanding your organization's specific needs for the ERP software. Identify the key features, user capacity, and scalability requirements. Document these needs clearly, highlighting essential versus optional functionalities. Knowing your precise requirements enables you to negotiate more effectively and ensures you do not compromise on critical aspects of the ERP system.

Key points. 1. Strong RFP. You need to unsure what you need is what you will have and you will pay for in terms of functionalities, integration, performance, security and users. 2. Offerer must to sign insurances related its proposal 3. Never to buy if RFP results shows ERP covers < 85% of you need 4. understand that you are going to have a relationship for various years and a bad marriage is expensive; finally an ERP is a tool, not your core business SW. For that reason you have to invest only the minimum of resources. 5. Prefer proposals with incremental roadmaps and incremental licensing (including costs) 6. You must to give value whom offers maintenance and support costs whitin logical comercial parameters

I have used the below strategic approach to secure more flexible licensing terms: Communicate our needs: I thoroughly understand our organization's requirements and explain the reasoning behind our requests. Explore alternative options: Having a grasp of alternative vendors can provide leverage in negotiations. Leverage long-term relationships: If we've had a long-standing partnership with the vendor, I emphasize the goodwill and mutual benefits. Transparently discuss market alternatives: I make it clear to the vendor that we're aware of alternative options in the market. Break down the deal into phases: By structuring the agreement into smaller, incremental phases, I can demonstrate the potential for growth and expansion over time.

Define the supplier's responsibilities well, formalize them. Extend financial and implementation deadlines, justifying your needs (These will be your renegotiation powers). The supplier reduces Go Live as it reduces costs, so your team must define deadlines, this is essential. Hire a good Project Manager, to monitor each phase of the project. Appoint Key users (leaders) for each module and make their leadership and renegotiation tasks clear. Aligned with the tasks, it is time for renegotiation. In case of advance payment, renegotiate the payment for the implementation by deducting the monthly license fee. In case of delay, expose the errors, exactly who is responsible for the delay must be determined, everyone takes their part.

Conduct extensive research on various ERP vendors and their licensing models. Compare their offerings, pricing structures, and flexibility in terms. Gather information on market standards and alternative solutions. This research will equip you with valuable insights and leverage during negotiations, enabling you to make informed decisions and push for more favorable terms.

Um negociador bem informado é poderoso. Pesquise minuciosamente o mercado de ERP para entender os modelos e termos de licenciamento padr?o oferecidos por vários fornecedores. Esse conhecimento permite que você desafie termos inflexíveis e apresente alternativas que beneficiem ambas as partes. Compreender o cenário competitivo também lhe dá uma vantagem significativa, pois os fornecedores s?o mais propensos a fazer concess?es se souberem que você tem outras op??es viáveis. Estar bem informado sobre as alternativas no mercado fortalece sua posi??o de negocia??o, ajudando a obter termos mais favoráveis.

Souvent il y a plusieurs solutions dans le marché qui offrent des fonctionnalités similaires. Toutefois la première étape de préparation et d'identification des besoins favorise une solution sur les autres en termes de fonctionnalités, d'adaptabilité à l'entreprise, du co?t, des modes de licence,... Cette étape permet donc de faire une évaluation des solutions avant de les classer en ordre. A cet effet, le négociateur connaissant déjà sa cible, ses points de faiblesses et les points forts des autres solutions peut entamer le processus de négociation avec les intégrateurs avant de choisir la solution optimale.

Use your organization’s current and projected ERP usage data to your advantage. Demonstrate to the vendor the volume of users, potential for growth, and the long-term partnership benefits. Highlight how your usage aligns with their business model and revenue goals. By showing the value your organization brings, you can negotiate for more flexible and cost-effective licensing terms.

Ao negociar termos de licenciamento para sistemas ERP, concentre-se na varia??o do uso ao longo do tempo. Explique que você pode precisar de mais licen?as durante períodos de pico e menos durante meses mais lentos. Destacar essa flutua??o pode ser um argumento convincente para garantir termos de licenciamento flexíveis. Fornecedores s?o mais propensos a acomodar essas necessidades se entenderem que o valor do software está diretamente ligado à sua capacidade de se adaptar ao fluxo e refluxo da demanda da sua empresa. Isso demonstra a importancia de termos ajustáveis que acompanhem a dinamica do seu negócio.

Starting with a good rapport can make a huge difference when negotiating with ERP software vendors. It's about understanding their pressures and goals, not just getting on friendly terms. By genuinely engaging and learning about their business model and constraints, you create an environment open to flexible terms. It's like a dance, where understanding each other's moves leads to a rhythm that suits both. Being seen as a partner, not just another customer, enhances your chances of tailoring a licensing agreement that fits your needs. Plus, maintaining these relationships puts you in a stronger position for future negotiations.

Trust is key and therefore having a strong relationship with vendors must be established. Be transparent with your needs and timing. Acknowledge their needs (they are in business too.) Identify a path that addresses immediate needs and creates opportunities for both to be successful as you continue to identify subsequent priorities. It must be a partnership that's working to address outcomes favorable for both. This is an infinite game with more to gain as trusted partners.

Develop strong relationships with key contacts at the vendor company. Engage with their sales, account management, and executive teams to build rapport and mutual understanding. Relationship-building fosters goodwill and can lead to more willingness from the vendor to accommodate your needs. Personal connections can often facilitate smoother negotiations and better outcomes.

Construir relacionamentos fortes com fornecedores é essencial para negociar termos favoráveis de ERP. Aborde a negocia??o como uma parceria onde ambas as partes se beneficiam de um acordo bem-sucedido. Demonstrar que você valoriza o servi?o e a experiência do fornecedor pode torná-los mais receptivos a discutir termos flexíveis. Um relacionamento sólido n?o apenas facilita a negocia??o inicial, mas também garante melhor suporte e servi?o ao longo da vida útil do seu sistema ERP. Investir em um bom relacionamento cria uma base de confian?a e colabora??o mútua, resultando em uma parceria mais produtiva e benéfica.

Comme mentionné précédemment, la première étape d'identification des besoins est nécessaire pour le choix de l'ERP. Cette étape ne peut se faire correctement si on ne dispose pas de relations solides avec les fournisseurs. Cette relation, soit elle est directe avec un fournisseur partenaire, soit elle indirecte et recommandée par un autre fournisseur partenaire. Dans tous les cas, le ma?tre d'ouvrage a intérêt à développer des relations de partenariats avec des fournisseurs sérieux et de gagner leur confiance. C'est utile dans la définition des besoins, les négociations des modes de licence et leur flexibilité, les interventions d'urgence, les travaux de maintenance et de gestion de version... La confiance du fournisseur n'a pas de co?t.

Show your commitment to a long-term partnership by discussing potential for future business, such as additional modules, upgrades, or extended contracts. Offering commitments can incentivize the vendor to provide more flexible terms in exchange for guaranteed future revenue. Highlighting your organization's potential for ongoing business can make the vendor more inclined to negotiate.

I believe best relationship with vendors is made when it's a win-win situation. Vendors usually want you to succeed and be public about it. That's why it's crucial to leverage this in the negotiations. Another point to really consider is the side things you could ask your vendor to provide ex. training, workshops, help to establish center of excellence. It's not always just the licensing cost. There are other benefits to look for instead of just lower licensing cost.

Prepare alternative plans in case negotiations with the primary vendor do not yield desired results. Identify other vendors or solutions that meet your needs and can offer competitive licensing terms. Having alternatives gives you leverage in negotiations, as you can confidently walk away if the terms are not satisfactory. Being prepared with a backup plan ensures you are not forced into an unfavorable agreement.

I agree. Particularly if you’re talking about adding an addition instance to your belt. Understanding all deals on the table will play well into negotiating terms for new or additional business with a vendor. Knowing what level of business you are offering them and what other companies are offering you should lead you to understand what you can hope to expect realistically from your ideal provider. If your expectations aren’t met through negotiations, having those other deals on the table will enable you to walk away if needed and keep you free from being backed into a corner.

Consider involving legal and procurement experts in the negotiation process to review terms and ensure compliance with your organization’s policies. Be transparent about budget constraints and seek flexibility in payment schedules or phased implementations. Additionally, negotiate clauses for scalability, allowing for adjustments as your organization grows or changes. By addressing these considerations, you can secure licensing terms that are both flexible and aligned with your organization’s long-term goals.

I would add that consideration be made to your licensing requirements when Implementing your solution. You aren’t going to need all licenses immediately until the instance is in place and transition in hand. Ensure your contract supports this phased approach to allow you to claw back on costs to support your requirements. Consider your support requirement post go live including response times and scenarios. For a new instance, you’ll need some hand holding for your users but being clear on expected levels of support can help you embed your ERP to a company.

Scope Creep- Unclear or changing project requirements lead to delays, cost overruns, and scope expansion. Define core requirement that will deliver value add and agree to these being key deliverable, anything else should be considered ongoing development or phase 2, post go live. Insufficient Budget - Do you have sufficient budget to deliver the agreed requirements! Underestimating costs, led to budget overruns, resource constraints, and project delays.