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Negotiation tip: FYE a prime time for contracts

4/20/2012

Many negotiation tips for IT contracts focus on what to do at the table, but as a tech industry management consultant recently pointed out on the website Spend Matters, the timing of the negotiation can also make a big difference.

Gregg Spivack, director of client services at consulting firm NPI, wrote that the end of a tech company’s fiscal year can be an ideal time to work on a contract. The vendor can benefit by adding last-minute revenue to the books, and the buyer may benefit from flexible pricing or terms offered by a vendor that is eager to close the deal before the year end.

Different companies have different fiscal year ends, but this information is readily accessible, Spivack pointed out. He provided the FYE date for a number of top IT companies. Many, including VMware, IBM and SAP, end their fiscal year on December 31. Others have summer FYEs, including Microsoft (June 30) and Cisco (July 30).

A major IT player in the healthcare realm, McKesson, concluded its fiscal year at the end of March. On April 11, McKesson announced a major contract extension with the Department of Veterans Affairs. According to Reuters, the deal is valued at more than $31.6 billion.