n By Jon Brodkin
Everybody wants a bargain. But when it comes to the complex world of IT products, finding a deal or even knowing what something should cost can be tricky. Sixty-two percent of IT buyers say the pricing structures used by enterprise network vendors are “usually confusing” or “very confusing,” a Network World poll finds.
CTO Dave Leonard of Infocrossing, however, has figured it all out. With extensive experience as a buyer and seller, Leonard knows all the tricks for getting discounts from vendors.
There are basically three things that motivate a typical vendor, Leonard says. The first is obvious: the vendor want new sales. The second is less obvious: the vendor aims to displace competitors, and may even set aside“displacement funds” specifically to give discounts to customers who agree to get rid of a competitor’s product and replace it with the vendor’s. The third driver is the fear of losing ongoing revenue streams from maintenance and support costs.
Customers can use this knowledge to get Very clear 3% better deals, even in noncompetitive markets. Salespeople want to close deals before the Usually clear end of the quarter because they are under Usually confusing constant pressure to meet goals for each three-month period. In other words, make Very confusing 7% a sales representative sweat for a few extra weeks toward the end of a quarter and you might get a discount.
“Even if there’s not a competitive situation, using time against the vendor gives them the opportunity to sweeten the deal,” Leonard says.
Leonard pulled out all the stops recently when Infocrossing, an IT outsourcing
provider based in New Jersey, embarked on a standardization initiative across five data centers. The project saved the company $14 million through consolidation of labor, software and other costs.
Infocrossing, which operates in 12 states, has quadrupled in size through three major
NetIQ after an evaluation of the products, but didn’t tell the three vendors that the decision had already been made. The first step was to build a business case showing each vendor how much it would cost internally to use their products.
“We did a complete economic analysis to get to ‘what will it take us to get to a single platform,’” Leonard says.“The cost is kind of what we presented back to the vendors. … The idea behind that was to get them to understand that our cost of using their product was far greater than the actual cost the product was going to be.”
Leonard told the vendors that Infocrossing didn’t want to be flooded with consultants, because its own employees
How would you describe the typical pricing structures of leading enterprise network companies?
36%
55%
Total % adds up to 101% due to rounding. Based on Network World survey of 917 readers.
SOURCE: NE T WORK WORLD TECHNOLOG Y OPINION PANEL: W W W. N W WBE TOPDOG. COM
acquisitions over the past four years. The company ended up with data centers running three different server management tools, from CA, IBM’s Tivoli division, and NetIQ.
Infocrossing decided to standardize on
would have to run the system.“We did say you can help the overall economic case by affecting how much maintenance we pay on our existing install base,” Leonard says.
He also asked vendors to loosen restric-
References:
Archives