This is the time of the year when we typically help our clients frantically negotiate good year-end deals with their chosen ERP software vendors. However, this year is a bit different than most.
One of our blog postings earlier this year outlined some of the pitfalls of negotiating your ERP software purchase. As we outlined in the article, ERP buyers should beware of hidden and underestimated costs, acknowledge that a vendor’s first offer is not their best, and leverage competing offers from multiple offers. Generally speaking, these negotiating “levers” become easier to pull when entering a year-end deal.
However, one difference we’re seeing this year is that many ERP software vendors are hurting in the soft global economy. Instead of pushing through last minute deals to inflate their 2008 numbers over 2007, many are simply trying to stop the bleeding. This makes it a great time to be buying ERP software in a way that is favorable to your organization.
At the same time, there is no need to rush into making a decision this year. In normal economic conditions (if there is such a thing), vendors do not have a strong incentive to negotiate after the end of a fiscal year. For the next several months while the economy recovers, however, vendors will have a strong incentive to sell software however they can.
Other industry analysts tend to agree. Ray Wang, ERP analyst at Forrester Research, provides additional insight in one of his recent blog postings. According to Wang, companies should not hesitate to defer their ERP software purchases until January
So feel free to spend the holidays negotiating for your ERP software. If you’re not ready, then perhaps a ERP software evaluation process is in order, at which time you can use your negotiating leverage in Q1 of 2009.