Every software publisher has different volume licensing programs and pricing, so basing negotiations for a new accounting application on a recent purchase of an office suite may not be a buyer's best strategy. "What's more, pricing and deliverables offered to your competitors might be different than what you're offered, depending on your history with the supplier, position in your market, credit history, urgency to buy, etc.," says Rick Gunther, senior vice president of sales, ASAP Software, Buffalo Grove, Ill. Based on his experience working with corporate buyers for the provider of software licensing services, Gunther offers tips to negotiating a favorable software license agreement:

• Use a reliable asset management tool to take inventory of software applications and licenses. "You don't go to a grocery store without knowing what's in your refrigerator," says Gunther. "Why would you enter into a software license agreement without knowing the applications you have and which ones are properly licensed? If you're out of compliance or you don't know your compliance status before negotiations begin, you've lost a significant amount of leverage."
• Does the organization have exactly 5,000 systems, or is it more like 4,879? Most organizations tend toward caution and conservatism and overstate their PC counts. "If you round up to an even number because you're not sure of what you have, you'll spend far more than you need to," he says. "A good asset management solution will more than pay for itself in this situation; it will give you the information you need and a big bargaining chip when negotiating pricing."
• Get a clear understanding of the organization's hardware environment and capabilities. What's still in use? What's obsolete? Which systems will require upgrades? Again, a detailed asset inventory will help.
• Determine if the organization's end users actually use the deployed applications. An asset management tool with software usage monitoring capabilities will reveal if it's worth continued investments in licenses and upgrades for specific applications.
• Make sure everyone in the organization is on board with the decision to buy and the selection of suppliers. "Contract negotiations will slow to a crawl if someone has their own agenda that you know nothing about," says Gunther. This could be anyone from a recalcitrant executive who resists change to an IT manager who has a previous relationship with a different supplier.
• Have the organization's "T's & C's" ready in a working document before beginning negotiations. "If you don't have a standard contract that you can show the supplier, you have nothing to negotiate, which gives the supplier the upper hand. You need to tell the supplier up front, 'These are the rules for doing business with us.' The more you can set the expectations that will define the relationship, the better your bargaining position."
• Study competitive information, know the organization's options and be ready to express them. Not knowing what the supplier's competitors offer might get the organization just the bare bones deliverables. "What's more, don't give the impression that you favor a specific product or supplier; you'll quickly lose negotiating power," says Gunther. "If a supplier knows your organization is committed to his/her product, there's not much left to negotiate."
• Don't rely solely on a publisher representative. An independent reseller or distributor is a better source of information for options, competitive information and pricing. Does the organization need an application to perform specific functions? A reseller can provide a list of options. The organization also benefits from the reseller's experience, advantageous costs and customer service.
• The supplier's work shouldn't end with a purchase order. Gunther suggests buyers ask what they do to help communicate the decision to purchasers. "Your supplier should work with you to inform all authorized buyers within the organization about the relationship and how to benefit and save from it. "Many companies sign an agreement and still have users who continue to buy as if nothing's changed. This is especially important for large- or mid-tier organizations where decentralization makes easy communication of license program benefits a challenge.
• Research the history of the products the organization is considering. What kinds of bugs and viruses have suppliers contended with and what was the impact on customers? Was data security compromised? How quickly do they release patches? The contract should specify specific damages if such products adversely affect the organization's business.
• Know the terms of the license. "This seems pretty basic, but once you've made the purchase, IT might be all too quick to click past the terms to install the application," he says. "Not knowing what that license states could cost your organization certain benefits and remedies. For example, is the license transferable or nontransferable, limited or unlimited, exclusive or nonexclusive?"
• Know how end users adapt to new technology. Is there resistance to new applications? How many will require training? How many calls does the help desk take each month for application assistance sale services? The answers to these questions may make a difference in what buyers negotiate for in post-sales services.
• Remember, the lowest price isn't always the best deal. A low cost up front might carry high risk in the future. Gunther says, "You could be required to buy additional licenses at a higher rate, or the supplier might be in danger of going out of business. A higher initial price might mean lower risk in the long run."

Knowledge is indeed power. The information the buying team gathers on the organization's IT assets puts it in a position of power. There will be no guesswork when it comes time to put numbers in a contract, which will save a significant amount of time in the RFP (request for proposal) and negotiation stages. The savings in time and money in every step of the process, from the discovery phase to initial purchase to post-sales activity, can add up to a significant return on the organization's asset management spending.