Spend Management Software — Now is the Time to Buy

If you're looking to purchase a new Spend Management software package (either installed or SaaS) or upgrade an existing version of what you have, let me strongly suggest that November and December 2008 might be the time to do so. Historically, Q4 is a very strong quarter for enterprise software vendors, as many deals that organizations have worked on throughout the year inevitably end up closing in the final weeks. Yet due to the current economic downturn, many companies are closely scrutinizing broader IT budgets going into 2009. But we all know that given the quantifiable returns that are possible from both upstream and downstream procurement and sourcing applications, it's often possible to convince senior management that even in a time of cost cutting, that Spend Management technology represents a smart investment with a rapid ROI (as an aside, if any vendor starts throwing around the term TCO to help sell their package, show them the door and tell them to wake up and smell the recession).

But this last point says nothing for the potentially ideal timing for getting a point or packaged suite solution at a highly attractive price point given the desire among vendors to close the year strong. From a software negotiation standpoint, one of the best techniques to getting a good deal is universal across virtually everything you source. And that's the importance of price, feature and company benchmarking as part of the RFP and negotiation process. Above all, know your supply market. And at the same time, as my long-time colleague Pierre Mitchell suggested to me recently, apply the same sourcing techniques to Spend Management technology as you would to anything else.

For example, just as you would not recommend that the business sole source a large contract to a single supplier that had inferior capabilities relative to the market benchmarks in some of the areas covered, it does not make sense to apply different logic to software. After all, you would not recommend applying supplier rationalization approaches to categories where the end-result would be an inferior solution -- either from a total cost, value creation or risk perspective. So if you take anything away from this post, remember the following: buy what you need, buy at the right price (and don't put off investments to 2009 if you can get a better deal in Q4), and above all, buy from the collective set of vendors who can fulfill your business requirements, which will most likely include -- but not be limited to -- your ERP providers.

- Jason Busch

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