IT buying tips: How to be your company's IT hero by knowing what to ask

[dhilipkumar]

IT buying tips: How to be your company's IT hero by knowing what to ask


With vendors in the hot seat, tell them what you want so you can get it


When buying IT products and services, the best price can often be trumped by the best deal.

What that means, said IT consultant Bill Peldzus, is that the lowest price isn't enough of a goal if an IT contract doesn't include all of the things you need over the length of the purchase.And the time to get valuable throw-ins is while you're in the midst of negotiations, not after all the papers have been signed and the winning vendor has left the premises.

"The purpose of negotiations is to get the best deal, not to crush your opponent," said Peldzus, vice president of data center and business continuity/disaster recovery at IT consulting company GlassHouse Technologies Inc."Your RFP process should always allow you to come down to the final two" vendors in a shootout for the contract, Peldzus said. "Now it gets very interesting."Peldzus made the comments at the TechTarget Storage Decisions conference in New York this week. He shared tips on "Buying Storage -- What the Vendors Don't Want You To Know," in a presentation to about 100 attendees.

The best way to go into the process, he said, is to have as much information about your company's needs as you can gather. By knowing what you need, you can better know what to ask for, through the preparation of a detailed request for proposal (RFP) and then later negotiation processes when you have your final candidates down to two.

One key item for RFPs before the final negotiations even begin is to demand line-item pricing so you can see what every item and service costs. That's important, Peldzus said, because it allows you to compare the costs from vendor to vendor and because it gives you more negotiating room."Is this about price?" asked Peldzus. "No, it's about all the other things that are going to make your life easier after you cut the check."When the deal is down to the last two vendors, that's when you have more leverage to get the best deal, he said. It may not lower the price, but it's the time when you can get the things that will likely make a difference to you later.

So what's important to ask for at that point? What are the things that vendors won't suggest for your contract that you should always ask for?

Here are some of Peldzus' tips:

# Ask short, specific questions about what they will do and what they will provide at what price. If your questions are too broad, their replies will be too general, too. Ask questions that would have yes or no answers, and if the vendors don't answer them simply, ask them again until you get the information you need to make your decisions.

#Tell prospective vendors from the start of the RFP process that if they have any questions or comments, they should go back only to you. That's a key to staying in control of the negotiating process, Peldzus said. Sometimes a vendor will try to go over your head to talk to a friendlier ear during the process. Tell the vendor that won't fly. Explain that if anyone else at the company is contacted, their company will immediately be eliminated from consideration. That will help you keep control and your credibility in the process, he said.

#Give the vendors a detailed physical diagram of your IT reference architecture so they see what you have, what you use and what you need. You can then take the proposal they return to you and see how it matches up on a graphic to determine if they'll be a good fit for your IT systems.

#Ask for an on-site vendor support technician for several months until your staff is up to speed on the new product or service, Peldzus said. This is an example of an add-in that can help seal a deal for a vendor at little extra cost to them.

#Now's the time to ask the vendor to include several years of maintenance and support under the proposed contract, while they are jockeying for position with the other remaining vendor, he said.

#Put in a penalty/backout clause, along with a proof-of-concept or initial installation provision, to protect your company in the event the vendor's products don't work as advertised, Peldzus said. The vendors won't suggest such a clause, but you certainly should.

#Ask for everything in writing, such as requests for written performance, stability and uptime guarantees, along with monetary penalties and requirements that they fix any infractions on their own dime, he said. "They're going to sign it," Peldzus said. "They want the deal."

#Ask the vendors to buy back your old equipment so you get money for it and you hand the disposal aggravation over to them. "Make sure you ask that question," Peldzus said.

#Try to time your acquisition process for the end of the vendor's sales quarter or year to give them the incentive to offer you their best deal.

#Never ever tell them your exact budget for the project, Peldzus said. Instead, if they ask, give them a huge range, say from $750,000 to $4 million, so they can't just target their offering to your existing budget.

#Ask if the vendor will install extra capacity at no charge while they are bringing in your purchased hardware, with the provision that you will pay them to turn it on later when it's needed, he said. This "pay-as-you-grow" approach is popular because it means the vendor won't have to come back to add more money to a contract later. "Vendors love that," Peldzus said.

#Ask for the same pricing terms for future purchases within the contract. That means that if you want to add another server or appliance later, you'll get it at no more than the price paid in the original contract. If the price goes up, you're protected, and if it goes down, you'll get the lower price. Think the vendor will offer such a provision to you if you don't ask? Think again, he said.

#Leave yourself three weeks for the final negotiations to give the two remaining vendors time to go back to their bosses to get needed approvals regarding your latest contract requests, he said.

#Ask for references and then call them. You may be hesitant because they're selected by the vendor, but have faith. "References are a great call if you ask the right questions," he said. "The cool thing is that they're very honest."

#Be open and tell the vendors what you are trying to do and what you are trying to solve, he said. "What keeps you up at night -- share that with them" to try to resolve it as part of the process.

#Remember that just because you ask for all of these things, it's unlikely that you'll get it all. "But if you don't ask the question, you won't be able to get a 'yes' answer," he said.