Vendor negotiations in a cloudy world from Kylie Fowler of ITAM Intelligence

1. The ITAM Review UK Conference 2017
Introductions
ITAM
Intelligence
What
we
do:
§ ‘Future
Ready’
SAM
and
ITAM
Strategy
Assessments
§ For
clients
who
need
to
make
sure
their
SAM
and
ITAM
is
fit
for
the
future
Kylie
Fowler
–
Principal
Consultant
Specialising
in:
§ Develop
and
implement
IT
asset
management
strategies
and
frameworks
§ Coach
and
mentor
ITAM
pracEEoners
§ Manage
audit
defence
&
lead
vendor
negoEaEons
§ Mergers
&
acquisiEons
advice
and
support

2. The ITAM Review UK Conference 2017
Vendor Negotiations in a
Cloudy World
Kylie Fowler, Principle Consultant

3. The ITAM Review UK Conference 2017
“I get a sinking feeling….
….it’s
Nick
the
Beard.
Nick
is
some
sort
of
technical
officer
from
CESG…
he
drops
round
the
Laundry
every
so
o=en
to
make
sure
all
our
so=ware
is
licensed
and
we’re
only
running
validated
COTS
so=ware
purchased
via
approved
suppliers.
Which
is
why,
whenever
we
get
word
that
he’s
about
to
visit,
I
have
to
run
around
rebooHng
servers
like
crazy
and
loading
the
padded
cell
environments
we
keep
around
purely
to
placate
CESG
so
they
don’t
blacklist
our
IT
processes
and
get
our
budget
lopped
off
at
the
knees.
Despite
that,
Nick
is
basically
OK,
which
is
why
I
get
the
sinking
feeling;
I
don’t
enjoy
treaHng
nice
guys
like
they’re
agents
of
satan
or
Microso=
salesmen.”
The
Atrocity
Archives,
Charles
Stross,
©2004

4. The ITAM Review UK Conference 2017
Our world is changing
Moving away from on-premise ‘Commercial Off The
Shelf’ (COTS) software
• Perpetual licenses
• Capitalised over 3 or 5 years
• Use forever

5. The ITAM Review UK Conference 2017
Our world is changing
We’re moving to a new world of ‘as-a-Service’
• Consume only what you need (in theory)
• Pay for only what you use (in theory)
• Costs are paid from operating expense accounts

6. The ITAM Review UK Conference 2017
CAPEX hasn’t gone away
(Mostly
Theirs)
Networks
Physical
Servers
Virtual
Machines
Databases
&
ApplicaEons
Client
Interface
Physical
End
Points
End
Users
(Mostly
Opex)
(Capex)
(Opex)
(Ours)
Networks
Physical
Servers
Virtual
Machines
Databases
&
ApplicaEons
Client
Interface
Physical
End
Points
End
Users
(Opex)
(Capex)
(Opex)
(Probably
Ours)
(Theirs)
(Mostly
Theirs)

7. The ITAM Review UK Conference 2017
What does this mean for Vendors?
Vendors
pretend
economies
of
scale
exist
Economies
of
scale
are
real
Vendors
can
only
guess
at
the
true
value
of
the
soZware
for
the
customer
Vendors
can
see
exactly
how
the
soZware
is
used
Vendors
don’t
need
to
worry
if
the
soZware
isn’t
used
It’s
vital
the
soZware
is
used

8. The ITAM Review UK Conference 2017
What does this mean for Customers?
Sweat
assets
to
significantly
reduce
costs
We
can’t
sweat
nuffin’
No
need
to
switch
anything
off
Cost
savings
can
only
come
from
switching
stuff
off
There
was
li]le
need
to
balance
business
value
to
costs
We
must
balance
business
value
vs
cost
so
the
business
can
decide
what
to
switch
off

9. The ITAM Review UK Conference 2017
Where’s the negotiation?

10. The ITAM Review UK Conference 2017
How does this affect negotiations?
Demonstrate commitment to deploy
• Share your migration programme business case
• Seek to negotiate non-monetary benefits that support migration
efforts
Be prepared to make volume commitments
• Remember – economies of scale are real!
• But commit ONLY if you know you will use the services!
The Vendor will know your business inside and out
• Seek to align costs to value eg cost per transaction; cost per unit of
storage etc
• This may be a drawback if you don’t understand the value of the
software to your own organisation

11. The ITAM Review UK Conference 2017
Who needs to be involved?
The
Business
• Who
will
access?
• How
many
people
/
transacEons
etc
• How
will
users
access
the
service?
• What
up-­‐Eme
does
the
business
require?
• What
type
of
data
will
be
put
in
the
cloud?
• Regulatory
requirements
• Exit
plan
IT
• SLAs
• Bandwidth
requirements
• Browser
/
device
requirements
• Firewall,
idenEty
management
and
AD
issues
• Deployment
plan
• Technical
&
financial
business
case
• SoZware
licensing
• Exit
plan
InformaEon
Security
&
Legal
• Data
residency
• Public
vs
private
vs
on-­‐prem
• GDPR
concerns
• Data
retenEon
requirements
• Escrow
agreements
• How
oZen
can
you
‘true-­‐down’
to
reduce
costs
• Liability
and
indemnificaEon
• Exit
plan

12. The ITAM Review UK Conference 2017
What else do you need to think about?
Negotiate with the end in mind
• You will have no leverage in subsequent negotiations if you don’t
have a BATNA (Best Alternative To a Negotiated Agreement)
• Consider what you need to include in the contract NOW to give
you a decent BATNA when the contract expires
- Termination periods
- T&Cs relating to data retention and export
Drive down the price as far as possible in your first contract
• It will set a benchmark for follow-on deals
• Negotiate a limit (eg RPI plus 2%) for price increases each year
and / or on renewal

13. The ITAM Review UK Conference 2017
What else?
Understand your growth plans
• Negotiate price holds / price holidays to avoid escalating costs for
longer deployments
- What is the impact on the business case?!
• Negotiate tiered discounts for higher consumption levels
What happens when business is bad?
• Ensure you can decrease costs promptly if usage decreases

14. The ITAM Review UK Conference 2017
Gotchas
BYOL T&Cs may change dramatically over time
• Vendors generally favour their own cloud
• You need to build flexibility into your BYOL estate
Poor deployment controls
• Vendor portals may have
expensive ‘default’ options which
can dramatically increase costs
Double licensing during migration
• Can you negotiate this away?
• What would be the impact of
delays on the business case?

15. The ITAM Review UK Conference 2017
Managing Risks
As-a-Service provider goes out of business
• Consider escrow options
• How quickly would you be able to get your
data out?
Data Security
• Most major vendors are as secure, if not
more so than on premise solutions
• Make sure there are adequate back-up and
business continuity arrangements
Data residency
• What data will be held on the platform?
• Where can that data be located?
Legacy Interactions
• How will the XaaS interact with existing on prem infrastructure?
• Don’t get caught out by the equivalent of Diageo’s indirect usage!

16. The ITAM Review UK Conference 2017
Book Recommendations
Thinking of.... Buying a Cloud Solution?
• Ian Gotts & Stephen Parker 2009
Getting to Yes: Negotiating an agreement without giving in
• Roger Fisher & William Ury 2011 (3rd edition)

17. The ITAM Review UK Conference 2017
Comments and Thoughts?
The ITAM Review UK Conference 2016

18. The ITAM Review UK Conference 2017
Thank You