The ITAM Review

News, reviews and resources for worldwide ITAM, SAM and Licensing professionals.

ARTICLE: 3 Steps to Negotiating Software Agreements

Daryl Ullman is a Software Licensing Consultant at Emerset, a company he founded in 2004. Daryl has eleven years experience in IT including seven years at Microsoft in Israel.

Here he shares his unique three step process for negotiating software license agreements;

STEP ONE – GAP ANALYSIS

Step One is to perform a Gap Analysis. We take a detailed look at our clients licensing status. This requires some form of software inventory tool to find out what is installed and usually involves some level of data cleansing to in order to build a clean inventory of installed assets. We collect anywhere up to six years worth of historical license records from the customer and vendor, their contracts, purchase history and build a statement of entitlement. We can then provide a licensing status report.

STEP TWO – FINANCIAL ANALYSIS

Step Two is Financial Analysis. We use data from the Gap Analysis and look at what the customer is planning 3 to 6 years from now. We look at what projects they have on the horizon, their strategic plans and compare and contrast this to the vendors roadmap and upgrade plans. We make sure the relevant agreements are in place and look at the various options available to the customer. Finally we look at the ramifications 3 to 6 years down the line for each agreement option. How it works out in terms of their projects, financials and their agreements.

STEP THREE – PLANNING THE NEGOTIATION

Step Three is when we begin planning the negotiation. This part is rarely performed by customers before a negotiation – even when millions of dollars are at stake. There is no negotiation strategy. We work with the customer to define the goals of the negotiation of the new contract. How much are they going to spend? what is their budget? We set out the differences between maintenance payments and new licenses and agree soft objectives such as support benefits, training vouchers and training.

Daryl claims that using this 3 step process in negotiations saves his clients 10% – 30% on licensing costs.

If you have any experience, techniques or advice for negotiating software license agreements please contact us

About Martin Thompson

Martin is owner and founder of The ITAM Review, an online resource for worldwide ITAM professionals. The ITAM Review is best known for its weekly newsletter of all the latest industry updates, LISA training platform, Excellence Awards and conferences in UK, USA and Australia.

Martin is also the founder of ITAM Forum, a not-for-profit trade body for the ITAM industry created to raise the profile of the profession and bring an organisational certification to market. On a voluntary basis Martin is a contributor to ISO WG21 which develops the ITAM International Standard ISO/IEC 19770.

He is also the author of the book "Practical ITAM - The essential guide for IT Asset Managers", a book that describes how to get started and make a difference in the field of IT Asset Management. In addition, Martin developed the PITAM training course and certification.

Prior to founding the ITAM Review in 2008 Martin worked for Centennial Software (Ivanti), Silicon Graphics, CA Technologies and Computer 2000 (Tech Data).

When not working, Martin likes to Ski, Hike, Motorbike and spend time with his young family.

Connect with Martin on LinkedIn.

Leave a Comment

attend our virtual conference

29th September - 1st October

Hear from expert speakers on topics such as audit defence and licensing, cloud cost management, addressing SaaS & IaaS risk, and much more. Find out more.