© 2014 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner's prior written permission. If you are authorized to access this publication, your use of it is subject to the Usage Guidelines for Gartner Services posted on gartner.com. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner's research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner's Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see "Guiding Principles on Independence and Objectivity."
Jo Ann Rosenberger, Research Vice President
"Analyst Day: Taming the Digital Dragon" Local Briefing Tuesday, March 18, 2014
Tweet: #GartnerLOC
Use a Strategic Negotiation & Acquisition Process (SNAP) to Optimize Your Deals
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Do You …
Perform TCO analyses as part of
the vendor selection process?
Develop and
maintain price
and Ts & Cs
checklists?
Ensure IT
acquisition experts
negotiate
your deal?
If "No," You Aren't
Optimizing Your Deals
Use an acquisition team
to identify IT, business,
stakeholder needs?
Strategize the timing
to align with vendor
qtr./fiscal year ends?
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Follow a Strategic Negotiation & Acquisition Process (SNAP) To Optimize IT Deals
Leadership and Timing Are Keys to a Successful SNAP
Research
Vendors and
Solutions
Maintain Terms and
Conditions
Checklist
Final Selection/
Final Negotiations/
Contract Execution
Determine and
Rank Requirements
Maintain
Acquisition
Checklist
IT Asset
Management
Form
Acquisition Team
Create
TCA/TCO Models
Strategize
Negotiation Plan
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Let's See SNAP in Action …
Scenario:
A Software Need Has Been Identified by Your Organization for a New Business Process Management Solution
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Form Acquisition Team to Capture IT, Business and Financial Requirements
Action Item: Once Software Need Is Identified, Form Team and Select Team Lead. Ensure Lead Is an Experienced Software Negotiator.
IT Procurement RFP, price checklist, negotiation strategy, lead effort
Legal Contract development/reviews, identify legal risks
Contract Management Ts & Cs checklist, contract reviews, contract database
Business Owner/Process Owner/CoE Communicate business needs, process performance
Technical Services Hardware/software requirements, technology standards
Application Development Project management, build vs. buy, customization efforts
IT Finance and Corporate F&A Budget, TCA/TCO analyses, finance/accounting impact
Enterprise Architect Technology requirements and standards, compatibility
Vendor Management Relationship, performance measurement
ITAM/SAM (Asset Management) Compliance, life cycle management
Form
Acquisition Team
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Research and Identify Vendors and Solutions That Can Meet Your Need
Action Item: Narrow Candidate List From Above Research and RFI Reponses to Identify Vendors for Competitive Bid Process.
Research References
External Sources/Consultants
RFI (Request for Information)
Team Member Assignments/Roles
Financial Stability
(D&B Reports)
Magic Quadrant Position
Vendor Demos
Reference Client Site
Visits
In-House 30- to 60-Day
Trial/Evaluation
Research Features,
Functionality, Pricing, Services
Research
Vendors and
Solutions
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Determine and Rank Software Requirements Criteria to Include in RFP
SOFTWARE VENDOR/SOLUTION SCORING MATRIX Weight is based on 1-5 scale. Score is based on 1-10 scale (higher = better/favorable).
Weight and scoring metric determined and agreed upon by acquisition team before RFP/bid process.
Score is average of acquisition team responses.
VENDOR A VENDOR B
Category Weight Score Weighted
Score Score Weighted
Score
License Fee 5
Maintenance Fee 5
Customization/Implementation Cost 5
Training Cost 4
Features 4
Functionality 4
Customization Capabilities 5
Business Process Requirements 5
Business Standards Alignment 4
Technology Standards Alignment 4
Gartner MQ Ranking 4
Financial Stability 4
Internal Development Requirement 5
In-House Evaluation/POC Success 4
Training Program/Courses 4
Terms and Conditions Risk 5
Negotiation Ease 4
Audit/Compliance Management Risk 4
TOTAL
Determine and
Rank Requirements
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Determine and Rank Software Requirements Criteria to Include in RFP
SOFTWARE VENDOR/SOLUTION SCORING MATRIX Weight is based on 1-5 scale. Score is based on 1-10 scale (higher = better/favorable).
Weight and scoring metric determined and agreed upon by acquisition team before RFP/bid process.
Score is average of acquisition team responses.
VENDOR A VENDOR B
Category Weight Score Weighted
Score Score Weighted
Score
License Fee 5
Maintenance Fee 5
Customization/Implementation Cost 5
Training Cost 4
Features 4
Functionality 4
Customization Capabilities 5
Business Process Requirements 5
Business Standards Alignment 4
Technology Standards Alignment 4
Gartner MQ Ranking 4
Financial Stability 4
Internal Development Requirement 5
In-House Evaluation/POC Success 4
Training Program/Courses 4
Terms and Conditions Risk 5
Negotiation Ease 4
Audit/Compliance Management Risk 4
TOTAL
Populate Scores and Calculate Weighted Scores
Determine and
Rank Requirements
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Determine and Rank Software Requirements Criteria to Include in RFP
SOFTWARE VENDOR/SOLUTION SCORING MATRIX Weight is based on 1-5 scale. Score is based on 1-10 scale (higher = better/favorable).
Weight and scoring metric determined and agreed upon by acquisition team before RFP/bid process.
Score is average of acquisition team responses.
VENDOR A VENDOR B
Category Weight Score Weighted
Score Score Weighted
Score
License Fee 5 9 45 8 40
Maintenance Fee 5 7 35 6 30
Customization/Implementation Cost 5 10 50 4 20
Training Cost 4 8 32 9 36
Features 4 8 32 4 16
Functionality 4 8 32 5 20
Customization Capabilities 5 7 35 5 25
Business Process Requirements 5 9 45 5 25
Business Standards Alignment 4 9 36 5 20
Technology Standards Alignment 4 7 28 7 28
Gartner MQ Ranking 4 8 32 4 16
Financial Stability 4 10 40 8 32
Internal Development Requirement 5 9 45 4 20
In-House Evaluation/POC Success 4 9 36 5 20
Training Program/Courses 4 8 32 7 28
Terms and Conditions Risk 5 4 20 7 35
Negotiation Ease 4 3 12 6 24
Audit/Compliance Management Risk 4 1 4 4 16
TOTAL 591 451
Total Scores
Dictate Who
to Select for
Competitive
Negotiations
Determine and
Rank Requirements
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Maintain a Software Acquisition Checklist to Expose Hidden Costs and License Ambiguities
License Fees and Models/Metrics: - What is license type (perpetual/term/svc./other)?
- What is license model (server/virtual/app./instance)?
- What is initial license fee (List and Net Price)?
- Is there a fee for add-on capacity, users, LOBs?
- Provide itemization for any bundling to ensure all separate SKUs, part #s, PID pricing are identified.
- Is there a fee for hardware changes or virtualization (e.g., server upgrades, adding processors, cores)?
- What is delivery method (hosted/on-premises/SaaS)?
- Are there product dependencies? If so, provide list.
- Will you discount additional licenses at same %?
Maintenance, Subscription, Support: - What is warranty period/maintenance start date?
- Provide pricing for all available coverage levels (e.g., 8/5, 24/7 — 2-hr./4-hr./next-day response).
- Identify SKUs, part #s, PIDs for maintenance, subscription and support, if they exist.
- Send maintenance, subscription and support descriptions and pricing for all options.
- Can subscription be separated from technical support? Provide prices for each.
- Is your maintenance and support pricing based on a % of net license fees? What is the %?
- Are you willing to cap maintenance increases in perpetuity at CPI% or 3% (whichever is less)?
Professional Services (Customization, Development, Implementation):
- Provide fixed price and T&M options.
- For T&M, provide all role levels and hourly rate for each (PM, developer, engineer, etc.).
- Are you willing to propose a blended rate? What is it?
- Provide cost, not to exceed pricing for additional services, if necessary (hourly and daily rates).
- Is T&E included in price?
- Are you willing to tie payment to final acceptance testing based on mutually agreed upon criteria?
Training: - Provide all training options, descriptions, and pricing (vendor on-site,
remote classroom, online courses).
- Is T&E included in onsite training fees?
- Are there third-party vendors that provide training?
DR, HA Backup, Test, QA, Dev., Non-Prod. Use: - Confirm that your policies allow this usage at no additional charge
(whether hot, warm or cold backup).
- Provide all usage policies not included in standard contract terms.
Need Specific Requirements (Acquisition Team): - IT (hardware, architectural, compatibility, customization)
- Business (customization, process, future needs)
- Financial (Capex/Opex requirements)
Maintain
Acquisition
Checklist
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
License Fees and Models/Metrics: - What is license type (perpetual/term/svc./other)?
- What is license model (server/virtual/app./instance)?
- What is initial license fee (List and Net Price)?
- Is there a fee for add-on capacity, users, LOBs?
- Provide itemization for any bundling to ensure all separate SKUs, part #s, PID pricing are identified.
- Is there a fee for hardware changes or virtualization (e.g., server upgrades, adding processors, cores)?
- What is delivery method (hosted/on-premises/SaaS)?
- Are there product dependencies? If so, provide list.
- Will you discount additional licenses at same %?
Maintenance, Subscription, Support: - What is warranty period/maintenance start date?
- Provide pricing for all available coverage levels (e.g., 8/5, 24/7 — 2-hr./4-hr./next-day response).
- Identify SKUs, part #s, PIDs for maintenance, subscription and support, if they exist.
- Send maintenance, subscription and support descriptions and pricing for all options.
- Can subscription be separated from technical support? Provide prices for each.
- Is your maintenance and support pricing based on a % of net license fees? What is the %?
- Are you willing to cap maintenance increases in perpetuity at CPI% or 3% (whichever is less)?
Professional Services (Customization, Development, Implementation):
- Provide fixed price and T&M options.
- For T&M, provide all role levels and hourly rate for each (PM, developer, engineer, etc.).
- Are you willing to propose a blended rate? What is it?
- Provide cost, not to exceed pricing for additional services, if necessary (hourly and daily rates).
- Is T&E included in price?
- Are you willing to tie payment to final acceptance testing based on mutually agreed upon criteria?
Training: - Provide all training options, descriptions, and pricing (vendor on-site,
remote classroom, online courses).
- Is T&E included in onsite training fees?
- Are there third-party vendors that provide training?
DR, HA Backup, Test, QA, Dev., Non-Prod. Use: - Confirm that your policies allow this usage at no additional charge
(whether hot, warm or cold backup).
- Provide all usage policies not included in standard contract terms.
Need Specific Requirements (Acquisition Team): - IT (hardware, architectural, compatibility, customization)
- Business (customization, process, future needs)
- Financial (Capex/Opex requirements)
Maintain a Software Acquisition Checklist to Expose Hidden Costs and License Ambiguities
Ask the Necessary Questions to
Get It Right From the Start
Maintain
Acquisition
Checklist
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
License Fees and Models/Metrics:
- What is license type (perpetual/term/svc./other)?
- What is license model (server/virtual/app./instance)?
- What is initial license fee (List and Net Price)?
- Is there a fee for add-on capacity, users, LOBs?
- Provide itemization for any bundling to ensure all separate SKUs, part #s, PID pricing are identified.
- Is there a fee for hardware changes or virtualization (e.g., server upgrades, adding processors, cores)?
- What is delivery method (hosted/on-premises/SaaS)?
- Are there product dependencies? If so, provide list.
- Will you discount additional licenses at same %?
Maintenance, Subscription, Support:
- What is warranty period/maintenance start date?
- Provide pricing for all available coverage levels (e.g., 8/5, 24/7 — 2-hr./4-hr./next-day response).
- Identify SKUs, part #s, PIDs for maintenance, subscription and support, if they exist.
- Send maintenance, subscription and support descriptions and pricing for all options.
- Can subscription be separated from technical support? Provide prices for each.
- Is your maintenance and support pricing based on a % of net license fees? What is the %?
- Are you willing to cap maintenance increases in perpetuity at CPI% or 3% (whichever is less)?
Professional Services (Customization, Development, Implementation):
- Provide fixed price and T&M options.
- For T&M, provide all role levels and hourly rate for each (PM, developer, engineer, etc.).
- Are you willing to propose a blended rate? What is it?
- Provide cost, not to exceed pricing for additional services, if necessary (hourly and daily rates).
- Is T&E included in price?
- Are you willing to tie payment to final acceptance testing based on mutually agreed upon criteria?
Training:
- Provide all training options, descriptions, and pricing (vendor on-site, remote classroom, online courses).
- Is T&E included in onsite training fees?
- Are there third-party vendors that provide training?
DR, HA Backup, Test, QA, Dev., Non-Prod. Use:
- Confirm that your policies allow this usage at no additional charge (whether hot, warm or cold backup).
- Provide all usage policies not included in standard contract terms.
Need Specific Requirements (Acquisition Team):
- IT (hardware, architectural, compatibility, customization)
- Business (customization, process, future needs)
- Financial (Capex/Opex requirements)
Maintain a Software Acquisition Checklist to Expose Hidden Costs and License Ambiguities
License Fees and Models/Metrics:
- What is license type (perpetual/term/svc./other)?
- What is license model (server/virtual/app./instance)?
- What is initial license fee (List and Net Price)?
- Is there a fee for add-on capacity, users, LOBs?
- Provide itemization for any bundling to ensure all separate SKUs, part #s, PID pricing are identified.
- Is there a fee for hardware changes or virtualization (e.g., server upgrades, adding processors, cores)?
- What is delivery method (hosted/on-premises/SaaS)?
- Are there product dependencies? If so, provide list.
- Will you discount additional licenses at same %?
Maintain
Acquisition
Checklist
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
License Fees and Models/Metrics:
- What is license type (perpetual/term/svc./other)?
- What is license model (server/virtual/app./instance)?
- What is initial license fee (List and Net Price)?
- Is there a fee for add-on capacity, users, LOBs?
- Provide itemization for any bundling to ensure all separate SKUs, part #s, PID pricing are identified.
- Is there a fee for hardware changes or virtualization (e.g., server upgrades, adding processors, cores)?
- What is delivery method (hosted/on-premises/SaaS)?
- Are there product dependencies? If so, provide list.
- Will you discount additional licenses at same %?
Maintenance, Subscription, Support:
- What is warranty period/maintenance start date?
- Provide pricing for all available coverage levels (e.g., 8/5, 24/7 — 2-hr./4-hr./next-day response).
- Identify SKUs, part #s, PIDs for maintenance, subscription and support, if they exist.
- Send maintenance, subscription and support descriptions and pricing for all options.
- Can subscription be separated from technical support? Provide prices for each.
- Is your maintenance and support pricing based on a % of net license fees? What is the %?
- Are you willing to cap maintenance increases in perpetuity at CPI% or 3% (whichever is less)?
Professional Services (Customization, Development, Implementation):
- Provide fixed price and T&M options.
- For T&M, provide all role levels and hourly rate for each (PM, developer, engineer, etc.).
- Are you willing to propose a blended rate? What is it?
- Provide cost, not to exceed pricing for additional services, if necessary (hourly and daily rates).
- Is T&E included in price?
- Are you willing to tie payment to final acceptance testing based on mutually agreed upon criteria?
Training:
- Provide all training options, descriptions, and pricing (vendor on-site, remote classroom, online courses).
- Is T&E included in onsite training fees?
- Are there third-party vendors that provide training?
DR, HA Backup, Test, QA, Dev., Non-Prod. Use:
- Confirm that your policies allow this usage at no additional charge (whether hot, warm or cold backup).
- Provide all usage policies not included in standard contract terms.
Need Specific Requirements (Acquisition Team):
- IT (hardware, architectural, compatibility, customization)
- Business (customization, process, future needs)
- Financial (Capex/Opex requirements)
Maintain a Software Acquisition Checklist to Expose Hidden Costs and License Ambiguities
Maintenance, Subscription, Support:
- What is warranty period/maintenance start date?
- Provide pricing for all available coverage levels (e.g., 8/5, 24/7 — 2-hr./4-hr./next-day response).
- Identify SKUs, part #s, PIDs for maintenance, subscription and support, if they exist.
- Send maintenance, subscription and support descriptions and pricing for all options.
- Can subscription be separated from technical support? Provide prices for each.
- Is your maintenance and support pricing based on a % of net license fees? What is the %?
- Are you willing to cap maintenance increases in perpetuity at CPI% or 3% (whichever is less)?
Maintain
Acquisition
Checklist
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Professional Services (Customization, Development, Implementation):
- Provide fixed price and T&M options.
- For T&M, provide all role levels and hourly rate for each (PM, developer, engineer, etc.).
- Are you willing to propose a blended rate? What is it?
- Provide cost, not to exceed pricing for additional services, if necessary (hourly and daily rates).
- Is T&E included in price?
- Are you willing to tie payment to final acceptance testing based on mutually agreed upon criteria?
Training:
- Provide all training options, descriptions, and pricing (vendor on-site, remote classroom, online courses).
- Is T&E included in onsite training fees?
- Are there third-party vendors that provide training?
DR, HA Backup, Test, QA, Dev., Non-Prod. Use:
- Confirm that your policies allow this usage at no additional charge (whether hot, warm or cold backup).
- Provide all usage policies not included in standard contract terms.
Need Specific Requirements (Acquisition Team):
- IT (hardware, architectural, compatibility, customization)
- Business (customization, process, future needs)
- Financial (Capex/Opex requirements)
License Fees and Models/Metrics:
- What is license type (perpetual/term/svc./other)?
- What is license model (server/virtual/app./instance)?
- What is initial license fee (List and Net Price)?
- Is there a fee for add-on capacity, users, LOBs?
- Provide itemization for any bundling to ensure all separate SKUs, part #s, PID pricing are identified.
- Is there a fee for hardware changes or virtualization (e.g., server upgrades, adding processors, cores)?
- What is delivery method (hosted/on-premises/SaaS)?
- Are there product dependencies? If so, provide list.
- Will you discount additional licenses at same %?
Maintenance, Subscription, Support:
- What is warranty period/maintenance start date?
- Provide pricing for all available coverage levels (e.g., 8/5, 24/7 — 2-hr./4-hr./next-day response).
- Identify SKUs, part #s, PIDs for maintenance, subscription and support, if they exist.
- Send maintenance, subscription and support descriptions and pricing for all options.
- Can subscription be separated from technical support? Provide prices for each.
- Is your maintenance and support pricing based on a % of net license fees? What is the %?
- Are you willing to cap maintenance increases in perpetuity at CPI% or 3% (whichever is less)?
Maintain a Software Acquisition Checklist to Expose Hidden Costs and License Ambiguities
Professional Services (Customization, Development, Implementation):
- Provide fixed price and T&M options.
- For T&M, provide all role levels and hourly rate for each (PM, developer, engineer, etc.).
- Are you willing to propose a blended rate? What is it?
- Provide cost not-to-exceed pricing for additional services if necessary (hourly and daily rates).
- Is T&E included in price?
- Are you willing to tie payment to final acceptance testing based on mutually agreed upon criteria?
Maintain
Acquisition
Checklist
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Professional Services (Customization, Development, Implementation):
- Provide fixed price and T&M options.
- For T&M, provide all role levels and hourly rate for each (PM, developer, engineer, etc.).
- Are you willing to propose a blended rate? What is it?
- Provide cost, not to exceed pricing for additional services, if necessary (hourly and daily rates).
- Is T&E included in price?
- Are you willing to tie payment to final acceptance testing based on mutually agreed upon criteria?
Training:
- Provide all training options, descriptions, and pricing (vendor on-site, remote classroom, online courses).
- Is T&E included in onsite training fees?
- Are there third-party vendors that provide training?
DR, HA Backup, Test, QA, Dev., Non-Prod. Use:
- Confirm that your policies allow this usage at no additional charge (whether hot, warm or cold backup).
- Provide all usage policies not included in standard contract terms.
Need Specific Requirements (Acquisition Team):
- IT (hardware, architectural, compatibility, customization)
- Business (customization, process, future needs)
- Financial (Capex/Opex requirements)
License Fees and Models/Metrics:
- What is license type (perpetual/term/svc./other)?
- What is license model (server/virtual/app./instance)?
- What is initial license fee (List and Net Price)?
- Is there a fee for add-on capacity, users, LOBs?
- Provide itemization for any bundling to ensure all separate SKUs, part #s, PID pricing are identified.
- Is there a fee for hardware changes or virtualization (e.g., server upgrades, adding processors, cores)?
- What is delivery method (hosted/on-premises/SaaS)?
- Are there product dependencies? If so, provide list.
- Will you discount additional licenses at same %?
Maintenance, Subscription, Support:
- What is warranty period/maintenance start date?
- Provide pricing for all available coverage levels (e.g., 8/5, 24/7 — 2-hr./4-hr./next-day response).
- Identify SKUs, part #s, PIDs for maintenance, subscription and support, if they exist.
- Send maintenance, subscription and support descriptions and pricing for all options.
- Can subscription be separated from technical support? Provide prices for each.
- Is your maintenance and support pricing based on a % of net license fees? What is the %?
- Are you willing to cap maintenance increases in perpetuity at CPI% or 3% (whichever is less)?
Maintain a Software Acquisition Checklist to Expose Hidden Costs and License Ambiguities
Training:
- Provide all training options, descriptions, and pricing (vendor on-site, remote classroom, online courses).
- Is T&E included in onsite training fees?
- Are there third-party vendors that provide training?
Maintain
Acquisition
Checklist
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Professional Services (Customization, Development, Implementation):
- Provide fixed price and T&M options.
- For T&M, provide all role levels and hourly rate for each (PM, developer, engineer, etc.).
- Are you willing to propose a blended rate? What is it?
- Provide cost, not to exceed pricing for additional services, if necessary (hourly and daily rates).
- Is T&E included in price?
- Are you willing to tie payment to final acceptance testing based on mutually agreed upon criteria?
Training:
- Provide all training options, descriptions, and pricing (vendor on-site, remote classroom, online courses).
- Is T&E included in onsite training fees?
- Are there third-party vendors that provide training?
DR, HA Backup, Test, QA, Dev., Non-Prod. Use:
- Confirm that your policies allow this usage at no additional charge (whether hot, warm or cold backup).
- Provide all usage policies not included in standard contract terms.
Need Specific Requirements (Acquisition Team):
- IT (hardware, architectural, compatibility, customization)
- Business (customization, process, future needs)
- Financial (Capex/Opex requirements)
License Fees and Models/Metrics:
- What is license type (perpetual/term/svc./other)?
- What is license model (server/virtual/app./instance)?
- What is initial license fee (List and Net Price)?
- Is there a fee for add-on capacity, users, LOBs?
- Provide itemization for any bundling to ensure all separate SKUs, part #s, PID pricing are identified.
- Is there a fee for hardware changes or virtualization (e.g., server upgrades, adding processors, cores)?
- What is delivery method (hosted/on-premises/SaaS)?
- Are there product dependencies? If so, provide list.
- Will you discount additional licenses at same %?
Maintenance, Subscription, Support:
- What is warranty period/maintenance start date?
- Provide pricing for all available coverage levels (e.g., 8/5, 24/7 — 2-hr./4-hr./next-day response).
- Identify SKUs, part #s, PIDs for maintenance, subscription and support, if they exist.
- Send maintenance, subscription and support descriptions and pricing for all options.
- Can subscription be separated from technical support? Provide prices for each.
- Is your maintenance and support pricing based on a % of net license fees? What is the %?
- Are you willing to cap maintenance increases in perpetuity at CPI% or 3% (whichever is less)?
Maintain a Software Acquisition Checklist to Expose Hidden Costs and License Ambiguities
DR, HA Backup, Test, QA, Dev., Non-Prod. Use:
- Confirm that your policies allow this usage at no additional charge (whether hot, warm or cold backup).
- Provide all usage policies not included in standard contract terms.
Maintain
Acquisition
Checklist
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Professional Services (Customization, Development, Implementation):
- Provide fixed price and T&M options.
- For T&M, provide all role levels and hourly rate for each (PM, developer, engineer, etc.).
- Are you willing to propose a blended rate? What is it?
- Provide cost, not to exceed pricing for additional services, if necessary (hourly and daily rates).
- Is T&E included in price?
- Are you willing to tie payment to final acceptance testing based on mutually agreed upon criteria?
Training:
- Provide all training options, descriptions, and pricing (vendor on-site, remote classroom, online courses).
- Is T&E included in onsite training fees?
- Are there third-party vendors that provide training?
DR, HA Backup, Test, QA, Dev., Non-Prod. Use:
- Confirm that your policies allow this usage at no additional charge (whether hot, warm or cold backup).
- Provide all usage policies not included in standard contract terms.
Need Specific Requirements (Acquisition Team):
- IT (hardware, architectural, compatibility, customization)
- Business (customization, process, future needs)
- Financial (Capex/Opex requirements)
License Fees and Models/Metrics:
- What is license type (perpetual/term/svc./other)?
- What is license model (server/virtual/app./instance)?
- What is initial license fee (List and Net Price)?
- Is there a fee for add-on capacity, users, LOBs?
- Provide itemization for any bundling to ensure all separate SKUs, part #s, PID pricing are identified.
- Is there a fee for hardware changes or virtualization (e.g., server upgrades, adding processors, cores)?
- What is delivery method (hosted/on-premises/SaaS)?
- Are there product dependencies? If so, provide list.
- Will you discount additional licenses at same %?
Maintenance, Subscription, Support:
- What is warranty period/maintenance start date?
- Provide pricing for all available coverage levels (e.g., 8/5, 24/7 — 2-hr./4-hr./next-day response).
- Identify SKUs, part #s, PIDs for maintenance, subscription and support, if they exist.
- Send maintenance, subscription and support descriptions and pricing for all options.
- Can subscription be separated from technical support? Provide prices for each.
- Is your maintenance and support pricing based on a % of net license fees? What is the %?
- Are you willing to cap maintenance increases in perpetuity at CPI% or 3% (whichever is less)?
Maintain a Software Acquisition Checklist to Expose Hidden Costs and License Ambiguities
Need Specific Requirements (Acquisition Team):
- IT (hardware, architectural, compatibility, customization)
- Business (customization, process, future needs)
- Financial (Capex/Opex requirements)
Action Item: Refer to "Collaborative Teams, Customized Checklists and Robust Models Can Expose Hidden Costs During Software
Negotiations" (G00253198) for This Checklist and Details on How to Effectively Use It as Part of Your Team Approach.
Maintain
Acquisition
Checklist
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Don't Forget Your Terms and Conditions — Hidden/Missing/Ambiguous Terms Can Be Costly
Risky Terms/Clauses Recommendations to Avoid "Gotchas"
Ambiguous or Missing Model/Metric Definitions
Define license type, models, metric. Illustrate how to count or measure the defined metric using examples in exhibits/addendums to contract.
Unclear License Use and Processing Rights
State how and where software can be used, who can use it, how accessed, who can access and who you can process by, for, and behalf of.
Missing Functionality Protection Language
Include functionality description, and state that if renamed, repackaged, rebundled or relicensed, you get the new functionality at no charge.
Missing Maintenance Increase Cap Language
Include table with not-to-exceed itemized pricing stating increases will not exceed CPI% or 3% (whichever is less) over previous year's fee.
Weak Maintenance Coverage Descriptions
Ensure that new versions, releases, enhancements, updates, upgrades, patches and fixes are included as part of subscription and support fee.
Avoid Silent SaaS Contract "Gotchas"
Clarify storage fees, premium maintenance, data security and privacy, customization, volume changes, SLA/uptime guarantees, renewal caps.
Unclear Usage Allowances State that you can use software for DR, backup/HA, test/dev./QA, may be used by managed svcs. provider/outsourcer, in a hosted environment.
Vendor MAD (Merger, Acquisition, Divestiture) Protection Provisions
Include language that states unless acquiring vendor can provide documentation and mapping formulas to make/keep you "whole" then rights, models and metrics of original vendor agreement will control.
Action Item: Refer to "Negotiate Maintenance Increase Limits and 23 Other Software Ts & Cs to Reduce IT Spending" (G00254854) to Create a Standard Software Contract Ts & Cs Checklist.
Note: Gartner does not provide legal advice or services, and its research
should not be construed or used as such.
Maintain Terms and
Conditions
Checklist
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Engage Finance to Create TCA/TCO Model — One Size Doesn't Fit All
Sample On-Premises BPMS Software Option Analysis
Option 1 Perpetual License
24/7 Support Site License
(20% Discount)
Option 2 Perpetual License
24/7 Support Processor Core Model
(70% Discount)
Year Budget/P&L Impact Budget/P&L Impact
1 $140,000 $208,000
2 245,000 208,000
3 245,000 282,667
4 245,000 282,667
5 245,000 282,667
5-Year Total Commitment $1,120,000 $1,264,001
5-Year NPV @ 3% $1,020,087 $1,151,659
Assumptions
Software License Fee (Net After Discount) $700,000 $520,000
Annual SW Subscription and Support $105,000 $104,000
Software Warranty Period 1 Year NA
HW Upgrades Yr. 3 — Processor Increase NA $140K License/20% ANMN
Uncovering all costs
using acquisition checklist allows IT finance to
analyze options for long-term
cost impact.
Note: Above Is Illustrative Data for Example Only.
Create
TCA/TCO Models
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Strategize the Negotiation Plan
Action Item: Once Scoring Matrix Is Populated and Totaled, Narrow Candidates for Final Negotiations — Always Keep Two in the Running
to Maintain a Competitive Environment for Bargaining Power.
• Establish Policies (No Social Events During Negotiations)
• You Schedule Meetings/Venue
• Timelines (Treat Like a Project: Team/Milestones/Goal)
• Communication (Everything in Writing)
Take/Maintain Control
• Who Are Competitors? (Use the Word Explicitly in RFPs)
• FY Ends Powerful (Strategic Timing Is Key - Refer to 25 FY ends hand-out)
• What Does Sales Want/Need?
• Previous Quarter Financial Results
Research and Build Leverage
• Strategize Timing Using Exec. Mgmt. Approval Levels
• Use Your Accounting Policy (Forces Itemization — Capex vs. Opex)
• RFPs Show You Are Serious (New and Renewals)
• Silence Is Golden
Strategize Your Plan
Strategize
Negotiation Plan
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Final Selection — Final Negotiations — Award — Contract Execution
Final Selection • Team review of competitive negotiation results • Team vote on final selection/candidate • Final management approval (if required) • Create "final negotiations" checklist
Final Negotiations • Use competition and qtr./ye as final push levers • Ensure no award until FINAL — Consider BAFO • Get itemized pricing: Capex/Opex is driver • Strategize timing using mgmt. approval levels
Contract Execution • Award once final negotiation points are in writing • Fact sheet to document IT and business sign-off • Attach RFP, proposals, oral/written promises • No payment until contract is FULLY executed
Ensure Acquisition Team Lead Regularly
Communicates/Reports Progress to Team and
Management
Final Selection/
Final Negotiations/
Contract Execution
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
ITAM/SAM: Develop Robust Processes to Ensure You Know …
IT Finance
Technicians/ IT-Business
Contract Management
Procurement ITAM
Who are the users?
What are the entitlements?
When was it installed?
Where is it installed?
How is it used?
Action Item: ITAM/SAM Processes Should Enable Communication of the Right Information to the Right People at the Right Time.
IT Asset
Management
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
SNAP At-a-Glance
Form Acquisition Team
• Virtual Team
• IT/Bus./Fin. Requirements
• Select Team Leader
• Experienced Negotiator
Research Vendors and Solutions
• Research — Gartner MQs
• Site Visits
• Demos/POCs/Trials
• RFI
Determine and Rank Requirements
• Use Scoring Matrix Template
• Entire Team Participation
• Total Scores Dictate Final Candidates
Maintain Acquisition Checklist
• License Fees/Models/Metrics
• Maintenance/Subsc./Support
• Professional Services/Training
• Usage Allowances
• Acquisition-Specific Needs
Maintain Terms and Conditions Checklist
• Maintain Standard Checklist
• Acquisition-Specific Needs
Create TCA/TCO Models
• Capture All Hidden Costs Using Checklist
• Ensures Accurate Long-Term Cost Impact
Strategize Negotiation Plan
• Take and Maintain Control
• Research and Build Leverage
• Create Approval Levels and Tactics
Final Selection/Final Negotiations/Contract Execution
• Team Vote/Create Final Negotiations Checklist
• BAFO/Use Tactics For Final Negotiations (Qtr./FY Ends)
• No Award Until Final Negotiations
IT Asset Management
• Who, What, When, Where, How
• Robust Processes
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Recommended Gartner Research
Five Best Practices to Cut Costs in Your Next Software Negotiation Jo Ann Rosenberger, Frank DeSalvo (G00234614)
Optimize Spending and Cut Your Software Costs Through Improved Negotiation Practices Jo Ann Rosenberger, Frank DeSalvo (G00230781)
Collaborative Teams, Customized Checklists and Robust Models Can Expose Hidden Costs During Software Negotiations Jo Ann Rosenberger (G00253198)
Negotiate Maintenance Increase Limits and 23 Other Software Terms & Conditions to Reduce IT Spending Jane B. Disbrow, Jo Ann Rosenberger (G00254854)
For more information, stop by Gartner Research Zone.
© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.
Discussion and Q&A