The New Software Licensing Environment — Tips and Tactics (Part 2)

In the first part of this post, I suggested a number of tips for vendors to navigate the increasingly long and tricky sales environment where many providers are finding themselves. For those who missed the first post, the Cliff Notes background summary of the situation is that even after a software deal is approved, it can still take weeks (or months) for final contract signature. For companies licensing software or renting it in a SaaS model, this new climate can play into your favor if you play it straight with the providers you're sourcing from. In this post, I'll share a few pieces of advice I have from a negotiation and licensing perspective to get the most bang for your buck in the current climate (and hopefully the Spend Matters audience will chime in with additional feedback as well).

Perhaps the most important piece of advice I can provide to those licensing software -- especially in the Spend Management world -- is to make the case to internal stakeholders about the dangers of waiting when it comes to signing deals. Show the NPV (or make your provider show the NPV) of the return the application will provide and also show the lost savings (or working capital sacrifices) that will negatively accrue from waiting to sign a deal that's already been approved.

Along similar lines to further build the business case, go back to your vendor and suggest a final kicker with clear expiration dates to get the company over the line to the vendor’s timeline versus the CFO's. Then take this final carrot back to those with final sign-off authority and make the case for signing now versus waiting. Remember, this will often require an exception to the new rules when it comes to signing deals, so making a strong case is paramount. Best to tell your vendors that it's also up to them to put the very best rationale and case forward to get a deal done.

The next piece of advice I have for companies licensing or renting software is to fully explore all of the financing options associated with deploying capabilities -- not to mention the working capital and balance sheet implications of doing a deal in the first place. Even with a strong business case, today's environment calls for extra scrutiny to push through a license agreement. For installed software, financing or even relationships that resemble lease- or rent-to-own concepts might be more palatable if they reduce upfront working capital requirements. In the case of SaaS deals, perhaps a provider might be able to throw in a certain amount of enabling services up-front to drive rapid ROI (e.g., category sourcing, invoice auditing, etc.) while baking the cost of these services into a multi-year agreement paid for overtime. Approaches like this will not only accelerate the ROI of initiatives but can play a key role in accelerating the internal velocity and interest in getting a deal done quickly.

Oscar Wilde once remarked that "no man is rich enough to buy back his past". Given where we now find ourselves, I might add that no corporation will ever be rich enough to fully recover the impact of lost or delayed savings opportunities. So what are you waiting for?

Jason Busch

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