DELL EMC CONTRACT RISK OVERVIEW
Dell EMC’s growth strategy is dependent on preserving annual spend levels and deterring attrition of licenses. As a method to support its growth strategy, Dell EMC uses terms and conditions to eliminate the feasibility of switching solutions or reducing annual fees. In this Dell EMC report, we dive into the top Dell EMC contract ‘gotchas’ used to lock in customers and continually drive cost increases. The contract language that is addressed in this report includes:
1. Dell EMC Term Licensing & TLAs
There is significant risk in buying storage software separately from the hardware as it creates inconsistency in the agreement term length and locks in Dell EMC as a vendor in your storage environment. For example, storage hardware typically has a life expectancy ranging from 5-7 years before organizations need to refresh devices, while TLAs have term lengths ranging from 3-5 years. This section explains how to combat Dell EMC's usage of staggered renewal terms to limit your ability to effectively compete hardware and software refreshes to obtain the best pricing/terms possible.
2. Dell EMC Maintenance Renewal Caps
Dell EMC will enforce a massive uptick relative to your existing run rate (potentially up to 5x or higher) if there are no renewal caps in place. We've also seen Dell EMC threaten to charge list price on maintenance at renewal to force clients into TLAs and adopt new software/hardware product. This section explains the importance of utilizing renewal caps to maintain a competitive advantage at renewal time.
3. Dell EMC Hardware Price Protection
Without price protections in place, it’s likely that add-on hardware purchases within a TLA will be priced at non-competitive rates. TLAs inherently prevent competition, due to the lock-in of the subscription software licensing. ClearEdge observes that customers that do not compete hardware storage pay at least 70% above the competitive street price (and as much as 4x street price). This section explains how to use price protections to maintain negotiation leverage and the competitive Dell EMC discounts you already achieved.
Contract terms and conditions are an integral part of Dell EMC's strategy. Dell EMC will not concede to competitive terms without a strong negotiating position, because its success is tied to maintaining their standard contract language. To execute a successful Dell EMC deal, negotiators need to be wary of all contract risks and ways to protect their organization from future cost increases. For additional assistance on your Dell EMC purchase, review some of the other ClearEdge resources listed below to help plan your strategy and mitigate risk.