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Software contract negotiations becoming tough for businesses

9/12/2011

A recent press release from a software company explained how important the negotiation process is for companies and third-party vendors.

According to the release, while most contract negotiators will make cost their primary focus, other important factors and terms of use will allow for greater flexibility in their software deployment. In addition, the more flexibility negotiators are able to obtain, the greater the benefits become.

Paying attention to specific details within negotiations is important. The release uses an example where a negotiator highlighted his ability to reduce the vendor's overall price by 95 percent of its normal cost. However, after looking closer, the negotiator had bought a license for every employee at the company for this discounted price, when purchasing one for just 15 percent of the company would have sufficed. As a result, the discount was closer to 67 percent.

Among the important terms negotiators should look to include, according to the release, are removal of geographic limitations or organizational scope, definition of maintenance rates, ability to absorb mergers and acquisitions into contractual terms and the ability to put any unused software on hold. Having these terms included may yield more profitable results, the release states.