Enterprise Resource Planning – Negotiating the Best Deal
July 9th, 2009 Filed under: Uncategorized — Negotiation Author
After doing extensive research on the Enterprise Resource Planning (ERP) solutions that are available to your business, you’ve come to the point in your search when it’s time to seal the deal with your ERP provider. This necessitates a discussion of cost and pricing, as well as determining what features will best serve your business as you move forward. As in every business situation, costs and prices are open to negotiation, and you must enter into this discussion with your potential vendor by taking a few simple steps to ensure you position yourself well to receive a great price on your ERP.
1. Don’t take the first price as the actual price.
Any vendor who works with businesses – whether he be an ERP vendor or an office supply sales rep – knows they must have room for negotiation built into their quoted prices. In general, you can expect a discount of about ten percent off the published rates just for asking – similar to how if you phone a hotel and ask for a rate over the course of a week, then ask, “Is that the best you can give us, given the length of our stay?” the reservationist will usually find some way of cutting you a deal. Think of your sales rep as a reservationist, and of yourself as the hotel customer. Know what your company can afford and know what you’re willing to pay, and low-ball that offer – your rep expects you to move up as he moves down, so give yourself plenty of wiggle room.
2. Negotiate with more than one vendor at a time.
When looking for a job or negotiating a salary, it’s a good idea to have more than one offer in the works – the same is true when negotiating with ERP vendors. Just because you like one company doesn’t mean another isn’t going to provide you with excellent service as well. Narrow your list to five vendors you think can provide the service your company needs, then use price negotiations as another way to vet which ones might surge head of the pack. If your sales rep tells you that he can’t go lower, don’t be afraid to walk away – just let him know you’ll need to check with the other vendors you’re considering, and don’t let him pressure you into making a decision on the spot. If he wants your business (and he does), his offer will stand while you consider your options.
3. Don’t be swayed by free stuff.
You started your search knowing what you and your company wanted from your ERP solutions; stick to this list and if your rep offers to throw in free features or modules instead of discounting your price, make sure they were on your original list (they shouldn’t be; your list should be fulfilled by the ERP solution you’re after). You want a discount, not a lot of features you’re never going to use and don’t need.
4. Offer to serve as a reference if you have a positive experience with the company.
Just like you wanted to speak to current clients before you made your decision, future clients will ask your ERP vendor for references. If you’re willing to speak up for them (provided you have a positive experience), they may consider lowering your price.
5. Extras you actually need.
Business consulting, maintenance, and training are important parts of ERP work and because they deal with human beings rather than fixed costs, you may be able to negotiate them lower. See if your rep is amenable to this.
Courtesy of http://www.compareerp.com
