Why the cheapest deal is not always the best deal in technology
by Roger Gomol
In our latest blog post HOW TO KILL A TECHNOLOGY PROJECT BEFORE IT HAS EVEN STARTED, we discussed the most common mistakes that can halt a project before it gets out of the starting blocks. Some of the mistakes result from difficulties setting pricing for IT purchases and proving the business value.
Here are three things to consider during the decision process that will help you choose the best proposal for your business.
DEMAND TO SEE THE FULL PICTURE
Some vendors and system integrators will go a long way to secure a first deal. When pitching to a customer it is can be tempting to shift costs to later phases of the project. Moving the licensing of additional features, users or volumes to a later point can make a price tag significantly more attractive – the same applies to customization or enhancements. Some of this might happen in a subtle way making the initial price tag very appealing while glossing over details that drive the total cost through the roof. Make sure that it is absolutely clear which costs will occur and when. Also, it is imperative to know who will be responsible for each task during implementation and which tasks need to be covered by you? Any good integration partner or advising consultant –such as TAI SOLUTIONS– will provide full transparency on all costs over the project lifecycle. If cost transparency is not guaranteed then it is probably more prudent to step back from the proposal.
PLAN FOR THE LONG TERM
The typical productive lifecycle of e.g. storage hardware is about four years where as application systems might be with you for 10 or 20 years. Therefore, when making a purchasing decision take great care in understanding all future costs of operations and enhancements. Ask the right questions about vendor reliability, skill set portfolio, proven experience and ability to meet all necessary standards required for your project. Also, a professional Total Cost of Ownership (TCO) and/or Return On Investment (ROI) measurement is essential for understanding costs and business benefits of proposed solutions. TAI SOLUTIONS assists its customers in measuring accurately the TCO & ROI of any new IT infrastructure or application to fully understand the true business impact in financial terms.
MAKE SURE THAT EVERYONE FEELS LIKE A WINNER
Last but not least it is critical to ensure that everybody at the table feels they are getting a fair deal. If you push a product vendor too hard on price then how good do you think the support will be, or how likely will you be offered a fair price for any future enhancements or licensing? The same applies to any partner for the implementation and operation of the new systems. If they do not profit from the project because you forced their hand on price, they might not give you access to their most experienced engineers which might put your entire project at risk. Don’t get me wrong on this, you need to negotiate hard to get the best deal for yourself but negotiate intelligently and know the risks if you over do it. You should also make sure that it is still fun for everybody in your team of suppliers to work with you, as successful long term projects depend a lot on positive synergy between all involved. TAI SOLUTIONS is highly experienced in deal negotiation and we are happy to offer you any guidance and advice you may need to close bigger deals effectively.
If you feel that your budget is not sufficient for the solution you are seeking then think carefully before you go for second best. It is often better to find ways to increase your budget or to reshape the scope of the solution by thoroughly assessing the planned use cases for potential efficiency improvements. There is nothing worse than starting an IT project that is underfunded from the beginning . Your business, your IT department and your personnel will all suffer. See the previous blog post on HOW TO KILL A TECHNOLOGY PROJECT BEFORE IT HAS EVEN STARTED for additional insights on this topic.
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TAI SOLUTIONS provides advisory services to enterprise product selection teams. Contact us to start the conversation.