Filed under: IT Financial Management, Microsoft, Negotiations, Software, Total Cost of Ownership
Microsoft’s Select and Enterprise Agreements have long provided for a 30-day grace period at the expiration of the Agreement, for customers to decide whether (or not) to renew Software Assurance.
However: In the latest version of Microsoft’s Agreements, the 30-day grace period was eliminated. This now means that Software Assurance must be renewed before the expiration of the enrollment or customers may be required to purchase new licenses to remain in compliance with their Agreements.
The apparent goal of this change is to shift the balance of negotiations power to Microsoft at the time of renewal. Clients should be in a position to make final decisions 90-days prior to Agreement expiration, and the time required for a Client to fully review its Microsoft investments averages 90 days.
As a result, NET(net) now recommends an engagement start date of no less than six months prior to Agreement expiration for Clients to perform an initial assessment of their Microsoft Agreements and/or renewals.
In addition, the Change of Channel Partner (COCP) form for your Large Account Re-Seller (LAR) is also changing. The time between the date a customer signs the COCP and the day the COCP takes effect will increase from 30 to 90 days. This is another good reason why Clients want to be prepared to implement all changes 90-days in advance of Agreement expiration and/or renewal.
With the COCP change, we now recommend that EA customers review their LAR relationships annually, and if dissatisfied, there will be ample time to either remedy the LAR relationship or to change LARs before the next annual True-Up.
NET(net) will help Clients perform Microsoft Investment Optimizations and/or annual LAR evaluations, at least six months prior to Agreement expiration to ensure Clients have enough runway to achieve their Microsoft Investment goals and objectives.
Note- many Clients have annual true-ups in June, so January is a great time to get started.Stay tuned to this blog for more information on how you can make the most of your technology investments.
Hopefully, most of you are done with work for the year. But for those of you about to close end of year, firesale-type deals in the remaining 6 days of the year (the end of the year is even a Thursday, so you don’t have to “work” a weekend if this is your fate), here is a list of articles on how to get the most out of your transaction time:
Start your deals from good templates.
And, lastly, consider the reasons for agreeing to renegotiating deals.
To my faithful readers: Thank you for listening to me for another year. I hope you have a very joyous holiday season and a happy New Year. See you in 2010 (unless something really awesome in the licensing world happens between now and then).
Filed under: Uncategorized
Change “lawyer” to “contracts professional” and you’ve got it.
Filed under: negotiation
A few years ago, I got into a little issue at work. I had found that my negotiation dial could go all the way to 11. Being the Type-A person that I was, I learned how to crank it to 11 on a regular basis. And like the child whose mother warns him to not make that face because it’ll freeze like that, sure enough, I got to a point where I couldn’t turn it off.
No, I don’t mean dial it down, I mean turn it off at all. There was no 0. Oh, and 11 became the new 1. Which meant that there were even higher and much more intense levels above 11, too. It took about a month for it to impact my then-new marriage. A few days later, folks at work started to bristle, too. Uh oh.
With some patience, time and a little vacation, I reset my meter – only this time, 0 was 100% off and 5 was the new 10. Guess what? I didn’t lose any effectiveness at all. I was able to accomplish the exact same results as before – only this time, I didn’t piss people off in the process.
As with anyone who has undergone this type of behavioral transformation, it makes me more sensitive to others’ similar behavior. So when I see a slew of articles recently on negotiating everything from a raise to a new car or better ISP rates, I think back to being “at 11” and wonder about when it’s ok to NOT negotiate.
It’s ok. I really did just say “not negotiate.” And I meant it, too. (The world is not coming to an end. I promise.) There just happen to be times when it’s absolutely recommended to simply agree with the other party and take what they offer in the form in which it’s offered.
The question, of course, is: “When?”
Well – it’s up to you. But I recommend agreement without negotiation when the proposed solution/offer/etc is:
- Within your means to provide.
- Within your previously-considered range of acceptable offers.
- Not necessarily going to create a precedent that you’ll be tied to in the future.
Does this mean you might pay a little more? Maybe. Do a little more? Maybe. Get a little less? Maybe.
In exchange, you’ll keep your sanity… and your friends. Those are way more important than “winning” every negotiation.
[My apologies to Nigel and Spinal Tap for the stolen quote as the topic.]
Filed under: Negotiations | Tags: Bargaining Table, BATNA, Carrots, Cisco, Claiming Value, Cooperate, Creating Value, Defect, EMC, HP, IBM, Microsoft, Negotiate, Oracle, SAP, Sticks, Supplier Lock-in, Win-Lose, Win-win, ZOPA
In negotiations, whether we realize it or not, our cooperation increases the size of the pie for everyone (creates value) and our defection defines our slice of it (claims value).
We often develop imaginative ways to create value through the promise of mutual gains and introduce these ‘carrots’ into our negotiation strategy at the appropriate point as to maximize their impact and benefit. As it relates to cooperation and the use of carrots, most of us consider ourselves fairly effective with this approach.
What happens when the other party isn’t cooperating, however? Are we as effective at bringing them back to the bargaining table? Are we as capable of putting the deal back on the tracks?
Quite simply, what happens when they say no when we really want them to say yes? How do we move them to our way of thinking? That is the art of negotiation. The art of letting *them* have *your* way.
Former Secretary of State James Baker once famously said (and I’m paraphrasing here), Diplomacy is the art of saying nice doggie long enough until you can find a big rock with which to smash it in the head. If there is no rock, negotiation is pointless… How many of us negotiate without a rock? I can’t tell you the number of times I’ve had a client say we’re just going to tell our supplier we want to buy their stuff, but we need a better price. I nod politely and ask, “or what”? Puzzled, they ask, what do you mean “or what”? I explain, and what if they say no? What if they say this is the best possible discount they are able to offer you? What will you do then?
You see, the “or what” is the rub. Gee Mr. Supplier, we’d like you to give us a better discount. If you’re not prepared to answer the “or what”, you are just Oliver Twist asking for more. Seemingly, we are much less prepared to correct behaviors that are counter-productive to our goals and objectives. The use of ‘sticks’ in a negotiation is every bit as important as carrots, and in many cases, much more so. When one party cooperates and the other party defects, the defecting party claims value. When both parties defect, not only is no value created, no value is claimed either. It stands to reason then, that you can prevent the defecting party from claiming value by defecting. Sometimes the best way, perhaps the only way to bring a defecting party back to the bargaining table is to defect yourself.
Easier said than done? Defection in a negotiation is often viewed with a negative connotation, and is also often confused with the end objective. Some view it as confrontational or even as threatening. Regardless of how it’s viewed, a defection strategy is often justified. Defecting from a negotiation can be extremely effective in situations where a supplier is reaching or over playing their hand.
In one case, NET(net) was working with a client who had two viable solutions for a business need, and the preferred supplier overplayed their preference status to the tune of a 40% premium price over the competition. The client told the preferred supplier that the current price made it impossible for them to be selected, but the supplier refused to lower their price, believing that the client was bluffing. Instead of haggling, the client sent a polite thanks but no thanks letter, and went into unilateral negotiations with the alternative supplier with the full intent to get a deal done. The preferred supplier returned the next business day with a market leading price and improved terms and conditions. This led us to coin the negotiation axiom, “sometimes the fastest way to a yes is to say no”. This client didn’t bluff. They had every intention to do the deal with the alternative supplier and the preferred supplier knew it. It’s not gaming or brinkmanship; it’s defection. To be effective, it has to be credible, it has to be timed right, and it has to be sequenced appropriately. When it’s done right, it works.
While we are mostly inclined to be cooperative and we all work hard to find ways to increase the value and mutual gains for all parties involved in a negotiation, the use of sticks on a quid-pro-quo basis is an extremely effective way to control the bargaining table. Defections from negotiations are sometimes the best and perhaps the only way to break the cycle of supplier lock-in and the incumbency effect of entitlement rights. See future blog posts on these and other topics.