Avoid End-of-Quarter Buying and ELAs - InformationWeek

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Commentary
6/30/2008
09:32 AM
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Avoid End-of-Quarter Buying and ELAs

Last week I had the pleasure of keynoting at the DocTrain event in Indianapolis and also running a small session on "How to procure Content Technologies."... At the end of the session I chatted with the head of a leading US-based systems integrator who said he liked the session but would have added two key points: 1. Never buy at the end of a quarter and 2. Avoid Enterprise License Agreements.

Last week I had the pleasure of keynoting at the DocTrain event in Indianapolis (held at the truly magnificent Union Station venue), and also running a small session on "How to Procure Content Technologies." I have been running these small sessions for a long while now and they tend to prove very popular. Though I have been doing this for years, there are always new tricks to be added to the bag.

At the end of this particular session I chatted with the head of a leading US-based Enterprise Content Management systems integrator (who wishes for good reason to remain anonymous!) who said he liked the session but would have added two key points:

• Never buy at the end of a quarter • Avoid Enterprise License Agreements (ELAs)He is quite right - and anyone who attends these sessions in future will be sure to be reminded of these key lessons. First, when it gets close to the end of the quarter, vendors sales staff are desperate to boost and close any outstanding deals. Theoretically this puts you the buyer into a strong position. Theoretically you have maximum leverage. But theory is not the same as practice. Just as I would not go into the ring against Mike Tyson, you should likewise recognize that against an experienced account executive from EMC, IBM, Oracle, or any other ECM vendor, you are way out of your league. The great deal you negotiate - for example the 300 extra seats you got for the price of 150 - may not seem such a bargain in the long term. When prices drop, the next major upgrade is announced or you simply find them sitting on the shelf racking up maintenance costs. Buy what you need, no more, and stay away from Account Execs when they are trying to close out the quarter.

Likewise my friend makes a very good point about ELA's (particularly popular in large ECM and Archiving deals). These license schemes have been driven in part by the demand of large enterprise who in the past have bought modular licenses and found themselves stiffed when they need yet more modules at every turn. "Oh no madam, you don't have workflow as part of that deal... to make that system operable, you will have to buy more appropriate licenses from me."

ELAs seem to make a great deal of sense, since you get everything for a single price, but they bite in two unexpected ways. One, the ELA almost certainly excludes some vital component that you will only find in the fine print once it's too late. Secondly and potentially more serious: once you have signed an ELA, no matter how big the deal, you are no longer of any interest to the vendor sales team, who have moved on to the next client. I can personally attest to watching a deal worth over $20 Million US get signed - and watching the account exec leaving the building within 30 minutes, even though they were scheduled to remain for the next two days. Once you have signed an ELA you have lost any and all leverage with the vendor. Think hard about whether you want to be in that situation...Last week I had the pleasure of keynoting at the DocTrain event in Indianapolis and also running a small session on "How to procure Content Technologies."... At the end of the session I chatted with the head of a leading US-based systems integrator who said he liked the session but would have added two key points: 1. Never buy at the end of a quarter and 2. Avoid Enterprise License Agreements.

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