Updated: Jun 13, 2019
IBM Deal Season is now.
One of the most persistent -- and avoidable – complaints from IT deal makers involves their inability to create leverage against IBM. Why is this? Because Big Blue is expert at beating customers to the punch by presenting them with sophisticated, difficult-to-refute Business as Usual Models (BAUs) that outline what will be spent with IBM over the next few years if the ELA is not renewed.
IBM’s year end is December 31. Even though that date seems very far off, make no mistake: they are mapping out YOUR spending plans now. Further, your key internal stakeholders are about to scatter on summer vacations, trickling back in over the months ahead. Quite soon after that, your ability to meet gets truncated by the Thanksgiving/Christmas holiday season, then suddenly the ELA renewal deal is due. So, before your thoughts turn to lazy summer days, be forewarned: it’s deal season now.
I share this with you as a former sales professional - this is the exact strategy I relied upon, and one that most Enterprise Technology Sales Teams use today. If their BAU looked big, bad and ugly, it increased the attractiveness of our (the supplier’s) bottom-line offer.
Your call to action is this: gather your cross-functional colleagues to chart your own BAU requirements for IBM. Acting now is your best chance to set the agenda and pre-empt the IBM sales team, avoiding an inflated, unrealistic view of your reality presented by the sales teams. This is your window of opportunity to turn the table and force IBM to react to your plan, adjust to your demands, and control the starting point for negotiations.
IBM is a master at the IT sales game. They wait until there’s no time left for the customer to analyze and push back on the BAU model they present. This leaves customers trying to negotiate the seemingly attractive bottom line offer, instead of challenging the BAU starting point. Our observation is that customers who take the time to build their own BAUs are most competitive with IBM at deal time and have the best outcomes.
Seasoned IT deal makers are currently engaging with their CIOs, IT, business and sourcing colleagues to gather usage and demand input. In the weeks ahead, they’ll plot their needs and put a stake in the ground. All requirements do not need to be in – remember, adjustments can be made, you can always make a deal bigger, and you can always buy more later! Your model will morph over time; you simply need to come up with a starting point for the deal so that you can influence and evaluate IBM’s offer.
All of this is another way to say, “Start Early!” and don’t fall victim to what we call “Analysis Paralysis”. You’ll be glad you did: ClearEdge research indicates that your ability to achieve significant savings in any deal is largely determined by getting your expectations to a supplier before they get a proposal to you. To learn more about the perils of waiting, please contact your ClearEdge representative.
Robin Kostin is a Managing Partner at ClearEdge responsible for Enterprise Software and SaaS Advisory and Consulting. Robin spent over 25 years in IT sales, coming to ClearEdge after serving as VP Sales at Oracle. At ClearEdge she helps our clients improve their IT supplier relationships as evidenced in optimized agreements and long-term value.