Salesforce.com’s evolution from SaaS pioneer to cloud giant has been one for the history books. Today, SFDC is one of the largest cloud solution providers in the world – currently tied with AWS and just behind Microsoft. But like most IT vendors that have been around for a while, its offerings have begun to take on traditional pricing and licensing characteristics. 

One of these is the company’s willingness to negotiate. Historically, SFDC’s offerings, pricing and terms have been pretty cut and dried with firm pricing and very limited negotiation flexibility. But things are changing. Customers purchasing and/or renewing with SFDC will find there are a dizzying number of levers that can be pulled to drive savings and deal flexibility, and that it’s now more complex to determine your best-fit license types.

How can you save on your next SFDC deal? Here are NPI’s top 10 suggestions:

10. Push for best-in-class price caps on renewals.

9. Negotiate appropriate data ownership, extraction and transition assistance clauses.

8. Carefully examine all extra charges (e.g., security, performance, reporting, etc.).

7. For existing customers, examine actual usage (by user types and by items like storage, objects, tabs and fields). Reconcile your purchase/renewal accordingly.

6. Tap into benchmark analysis to know what’s truly a “special” offering and what is not.

5. Examine license types. Some options may provide the functionality you need at a lower price.

4. Be sure to shop for implementation assistance. We see a wide variation in quality and cost across providers.

3. Consider whether you need true-down rights, as well true-up rights to higher levels at agreed-upon pricing.

2. Be sure you understand how your license rights may permit or prohibit “indirect access”, and how that maps to your technical environment and usage needs.

1. Negotiate custom licenses/user types to match SFDC licensing to your needs.

Remember – preparation is key. Begin at least 4 to 6 months ahead of time and work closely with IT and business stakeholders to truly understand your needs, use and credible alternatives. Of course, consolidating your agreements/purchases (we often see companies with fragmented purchases across multiple divisions) and timing your renewals around quarter and year ends helps as well.

Let’s cut to the chase. ServiceNow’s evolution over the years has been impressive, but keeping up with its changing product portfolio can be confusing to customers. One reason is that the vendor’s target audience has changed from IT to an Enterprise scope as it creates new products and addresses new problems. This has led to numerous product SKU and pricing iterations over the years. One SKU change with perhaps the most implications for the customer community is the transition from the ITSA (IT Service Automation) Unlimited to Service Management Suite (SMS) SKU.

ITSA – The Original ServiceNow Application
The original target market for ServiceNow was the IT buyer as it sought to transform the IT service desk landscape with its IT Service Automation (ITSA) application. This application included core Incident, Problem, Change, Release, Asset, Request and IT Cost functionality and capabilities atopthe robust ServiceNow platform.

ITSA Unlimited – Encouraging Broader Adoption
It didn’t take long for ServiceNow to introduce additional tangential products. These included the IT Business Management Suite (ITBM) that includes Governance, Risk and Compliance (GRC) and Vendor Management as well as the Project Portfolio Suite (PPS) that includes SDLC, Project Portfolio, Resource, Demand and Test (along with newer Financial Management capabilities).

Knowing that enterprises needed an easier way to purchase these offerings, ServiceNow decided to bundle these application suites into a few SKUs. One of the most popular SKUs was called “ITSA Unlimited” where customers could have entitlement to use all of these applications for one price. Entitlements included ITSA, ITBM and PPS Suites, with CreateNow available as an add-on.

Service Management Suite – The Enterprise Service Management Vision
In 2014, ServiceNow aggressively began expanding its vision to break out of the ITSA box and market its platform at the functional department level. This change in vision drove ServiceNow to rebrand its core ITSA product under a new name called the “Service Management Suite” that now included ITSA as well as HR, Finance, Legal, Marketing, Facilities and Field Services applications. This move was made to encourage ServiceNow adoption across the enterprise.

ITBM and PPS have been priced and sold as separate individual products, and the older ITSA Unlimited SKU has been discontinued. CreateNow is still available as an add-on.

Implications
Older customers (more than 3 years) face some important choices at renewal time – keep the (no longer available) ITSA Unlimited package, or reconstitute their ServiceNow estate to meet current needs and plans? Consider your renewal carefully and conduct a detailed cost and requirements comparison. Some enterprises may find that their requirements necessitate a need to move to ServiceNow’s SMS Suite, and others may find they have a better deal holding on to the ITSA Unlimited SKU as long as possible.

This content was updated January 12, 2021.

Over the years, Epic Systems has grown to be a leader in EHR (Electronic Health Records) and other software licensing for healthcare. Known for its high-value products and services, and historically strong customer loyalty, more than 190 million patients have a current electronic record in Epic.

However, Epic is also known to be inflexible at the deal table. As one of the most expensive EHR systems on the market, they can demand a premium based on its solid reputation (more on that in a second, though). Below, we explore what to know before buying or renewing with Epic’s software licensing for healthcare.

What to Know About Epic: Contract and Renewal Costs

Lack of flexibility at the initial negotiation doesn’t mean there isn’t room for cost reduction across the lifetime of an Epic investment. Epic’s software licensing for healthcare requires multiple integration points with other vendor offerings – and this requirement is only expected to grow as the healthcare IT ecosystem becomes more interconnected. Fortunately, integration-point contracts are typically quite negotiable and an area where customers can find some savings on their Epic deployment.

Software Licensing for Healthcare: Knowing the Risk of Non-Compliance

Another thing to assess as you plan for an Epic renewal is a potential risk of licensing non-compliance for some Epic customers – specifically with regards to Microsoft. In these cases, large hospital networks may purchase licenses from Microsoft to support external users of their Epic deployment (doctors, patients, affiliates, etc.). Those purchases may have been made under a Volume Licensing Agreement.

The problem? Microsoft is telling some customers those licenses should have been procured under a Services Provider Licensing Agreement – even though they already own the licenses they purchased under a Volume Licensing Agreement. For a large healthcare network, this could mean unexpected licensing costs, and hundreds of “extra” licenses that can only be used internally. Therefore, it would be wise for Epic customers to conduct an internal review of risk in this area; and for new customers, be aware of this distinction and make sure you purchase Microsoft software licensing for healthcare in the best way.

Epic Software Licensing: Will Customer Satisfaction Affect Negotiation Flexibility?

Meanwhile, customer satisfaction with Epic is variable. In the 2016 Black Book Inpatient EHR Surveys, Epic’s customers reported feeling more “trapped” in their relationship with the vendor. According to the survey, overall customer loyalty dropped from 89 percent in 2015, to 80 percent in 2016. And while 98 percent of customers planned to renew their current contracts with Epic, far fewer (72 percent) said they would recommend an Epic purchase to their peers.

Since then, Epic has been working hard to improve their customer satisfaction and retention rates. As a result, they received eight Best in KLAS 2020 awards and were highlighted by Top Overall Software Suite.

Will this renewed focus on customer satisfaction translate into greater deal flexibility from the vendor? It could (eventually). For those customers who can’t afford to wait and see, it’s important to understand every point of leverage and savings opportunity across their entire Epic investment in preparation for upcoming renewals and purchases.

Negotiating Software Licensing for Healthcare

If you’re looking to reduce your software licensing costs with Epic (or any software vendor), it’s important to come to the table with vendor-specific pricing and negotiation intel. NPI can help. Our price benchmark analysis and license optimization services can help you materially reduce spend and eliminate overspending risk.

Whether you are a new Microsoft Enterprise Agreement customer or a customer who has renewed their Enterprise Agreement multiple times, it’s important to be sure to review your Enrollment Details prior to signing your paperwork. Here are the top two reasons why…

1. Your enrollment is where you define your enterprise (under section Enrolled Affiliate’s Enterprise). This means that for every product where you’ve made an enterprise commitment, you must purchase for your organization in the way you describe in this section. It’s been our experience to see that most Licensing Sales Professionals will set the default language for this definition to be for “Enrolled Affiliate and all Affiliates”, but this might not be the best definition for your organization. Don’t hesitate to request for this to be changed to “Enrolled Affiliate only” or for “Enrolled Affiliate and the following Affiliates” if that better suits your needs.
2. Your enrollment is also where you include or exclude future affiliates. As this can have an impact on your true-up numbers each year, it’s important that you have thought through the implications of your choice. More than likely, when your draft paperwork is presented for your review, unless you have discussed it previously with your Licensing Sales Professional, the default position with be “Include future Affiliates.” You also have the option to “Exclude future Affiliates.”

As with everything related to your IT sourcing agreements, always remember that you have a choice. Don’t hesitate to ask your Licensing Sales Professional if there’s something you don’t understand or want changed. And if you’d like to talk through your enrollment paperwork in more detail, NPI can help.

For a company whose electronic signature technology has simplified contracts for thousands of customers around the globe, DocuSign appears to be making its own customer contracts a little more complicated. If you’re a DocuSign customer approaching a renewal, or making an initial purchase, here are some things to consider:

There are two kinds of Premier Support; know the difference. There’s both Premier Support and Enterprise Premier Support. Ensure you understand the differences in pricing (typically a % of the subscription) and functionality. The main differences between the two support levels are response times, an Administrator Certification class that comes with Enterprise Premier, and the level of Technical Customer Support Manager assigned to your account. Understand your unique support requirements and avoid overbuying. 

The vendor is testing support cost increases. DocuSign is currently testing market acceptance of double-digit cost increases for both levels of support, so bring your negotiation chops to the table. Additionally, remember that the support percentages used cover support for the vendor’s typical three-year term. In other words, that XX% of your net subscription in support fees delivers three years of support – not one. 

Break down the bundle. DocuSign often likes to sell an initial contract with the subscription and support bundled together. Customers should push to separate these components to get a true view of their support and subscription costs (which is often a cost per envelope/transaction). Deconstructing the bundle can be especially helpful during renewal negotiations.

Demand transparency. Compared to some IT vendors, DocuSign exhibits a fair degree of pricing transparency – but that doesn’t mean customers should allow themselves to become complacent. Establish reasonable cost increase caps from the onset to prevent surprises during renewal. Also, keep an open dialogue about DocuSign’s contract models. NPI has seen some evidence of certain services being repackaged and made available only if clients upgrade.

Congratulations! You’ve purchased this great new service management technology called ServiceNow – now what? It’s like a big box of Legos where anything can be built, so what’s the right approach to take to ensure success? Is there a tried and true model? You’ve seen many other software applications turn into shelfware or get replaced in three years – how do you avoid that? Given the expanse of service management in the enterprise and its numerous applications, these considerations are very real.

While NPI is most heavily involved in helping clients optimize the actual IT sourcing event (e.g. purchase, renewal, etc.), we have a unique perspective on what happens during the “in-between.” This could be the time leading up to a renewal or when a client is struggling to capture the value from a purchase mid-contract.

It’s our mission to deliver a fair deal to our clients but we are also vested in the satisfaction our clients experience post-transaction – especially when it comes to ROI. We’ve found that customers that achieve a solid ROI also achieve more favorable pricing when they renew or expand their ServiceNow investment.

Here are some tips to make sure your ServiceNow investment delivers value and savings for the long-term.

Have a plan. You bought ServiceNow for a reason. Formulate an implementation plan based on your top use cases. The goal is to get the tool implemented and adopted. Stick to the next 6 months’ timeframe to get the foundation set, then expand from there.

Time to value. ServiceNow and its partners encourage Agile-style implementation to achieve quick user adoption. This is a proven methodology and much more effective than an elongated, boil-the-ocean approach. A side bonus is that if your organization is not experienced with Agile implementations, this is a great way to gain exposure and training.

Decide where ServiceNow ownership will reside. Where ServiceNow oversight resides and who is on the team will greatly affect adoption within your organization. The team should have direct exposure to lines of business because it’s an enterprise service management platform, not just an IT operations tool. The team should be comprised of people that have scripting capability and can work not only with IT but  also with business areas to identify how existing processes can be easily automated.

Engage an experienced ServiceNow partner. ServiceNow Professional Services or one of their many qualified partners is a must for the initial phases of implementing ServiceNow into your organization. The Agile model, knowledge transfer, training, and documentation will be invaluable to your team as you ramp up.

Start with the basics – the common approach. Companies buy ServiceNow for different reasons, and even though it’s an enterprise service management suite, the typical initial use case still centers around replacing an outdated, cumbersome legacy IT service management (ITSM) application. By taking this approach, your organization will focus on first getting the IT organization right, enabling you to then replicate the process to other business areas such as HR, finance or customer service. Our advice is to become familiar with the typical ServiceNow implementation roadmap that will set the core functionality in place during the first 4 to 6 months.

One last thing… Once you’ve implemented the basics, you’re only just getting started. Schedule a roadmap planning session with key members of IT and business senior leadership – and revisit the roadmap every 6 months. This will enable you to expose the organization to how ServiceNow can automate key pain areas within the organization and prioritize your ServiceNow projects. By taking these steps, you will maximize your success with the solution, increase adoption and time to value, and be in the driver’s seat for future ServiceNow investments and renewals.

In October 2016, Microsoft changed its licensing for Windows Server 2016 from processor- to core-based. On the surface the transition is similar to when SQL moved to core-based licensing. Windows Server 2016 now has a core-to-processor conversion ratio of 8:1. This means that each processor converts to 8 cores in the new licensing model. Microsoft will require that a minimum of 8 cores are licensed per processor and 2 processors or 16 cores will be licensed per server.

Microsoft is granting or grandfathering any installations above the required minimum the same as they have done previously. Similar to conversions and changing of licensing models in the past, Microsoft requires some form of ‘proof’ such as a MAP Toolkit report to verify how many cores above 8 are currently deployed and then ‘grant or grandfather’ in those cores, while not requiring customers to buy the additional licenses. You can therefore renew SA only on all of your deployed cores.

It will be a bit tricky and potentially costly for two fundamental reasons. One, any deployments of processors of more than 8 cores will equate to additional costs moving forward since you are licensing the actual cores (instead of just processors). This is very similar to those customers that went through the SQL conversion and had higher than the minimum cores. 

Two, now Microsoft is limiting Windows Server Standard to two VMs, which is not different than it is today – with the exception that Microsoft longer allows ‘stacking.’ Stacking Windows Server Standard allowed a customer to purchase additional licenses to gain the ability to run two more VMs for each license. Now, Microsoft will still allow a stacking of sorts, but you have to license all of the cores for every two more VMs. This will be more costly for core-dense customers. 

The major takeaway from all of this is that if you have processors with more than 8 cores, your costs will go up relative to how many more cores you have. Doing an inventory early is a great way to be prepared for the transition, and will enable you to make informed optimization decisions before Microsoft tries to come in and ‘help’ you with the process.

Microsoft has several volume licensing programs for large corporate customers – the Select Plus program (which is being discontinued), the Microsoft Products and Services Agreement (MPSA), and the Enterprise Agreement. The Select Plus and MPSA Programs are known as “indirect” agreements. You are actually buying from a third-party such as Dell, Software Spectrum, Insight, PC Connection, etc. These volume licensing programs are analogous to the way that you buy a car – you’re not buying from the manufacturer, you’re buying from the reseller. The reseller sets the price and, just like any other major purchase, the prices vary between resellers. 

The Enterprise Agreement program is a “direct” deal with Microsoft, and your purchase payments are made directly to Microsoft. Microsoft sets the price in this case. Interestingly enough, a reseller is also involved in an Enterprise Agreement. The role of the reseller in an Enterprise Agreement, sometimes referred to as the Enterprise Software Advisor, is to facilitate the preparation of the agreements, submit true-up orders to Microsoft on your behalf, manage the contract, and to service your account. 

On the indirect front, the reseller is the entity that sets the price for Select Plus and MPSA agreements. In an attempt to secure your business most resellers will agree to specific pricing terms for the course of the contract. It’s not uncommon to receive a “cost + x%” for Microsoft Select Plus or MPSA agreements for those customers that will commit to purchasing other hardware/software needs through a particular reseller. You should shop around resellers when dealing with Select Plus or MPSA agreements. The Enterprise Agreement program, though, is a little more complex. The reseller has no ability to adjust the price. Microsoft sets the price and, potentially, offers discounts and contract concessions. 

Given this, is it fair to say that the reseller doesn’t matter when it comes to Enterprise Agreements?

No! The Enterprise Software Advisor is actually paid by Microsoft to manage the Enterprise Agreement account on their behalf. The genesis of this situation is that Microsoft previously had only indirect deals. The company was concerned that the reseller community would sell against them if they moved to a direct-only model. As a result, Microsoft offers ESA payments to the reseller community to manage the Enterprise Agreement accounts. They are responsible for preparing the standard agreements, providing the signature page to the client, and ensuring that true-up reports are submitted on a timely basis. Additionally, the Software Advisor is trained on Microsoft’s Software Assurance (SA) benefits and is incented to ensure that customers are consuming Software Assurance benefits. The price paid to the reseller community for these services has changed over the years, but there are still significant payments made to the resellers based upon the size of the agreement, the size of the true-up, and whether you are activating and consuming your SA benefits. 

The reality is that the Enterprise Software Advisor does receive a financial incentive from Microsoft to serve as your advisor. Knowing the reseller is being paid by Microsoft to manage the contract, you should negotiate a level of service commensurate with your needs. 

You may wish to consider the following when selecting an Enterprise Software Advisor: Will they provide a dedicated account representative? Is there an inside team to support you? Can the reseller run reports detailing the purchases you have made across multiple agreements? Does the reseller provide support in all of the geographies in which you do business? In an indirect deal like Select Plus or MPSA, can the reseller invoice you in local currencies? 

Most Enterprise Software Advisors look to create lasting relationships with their customers, yet it never hurts to shop your agreements around on an annual basis.

What is SAP HANA? Most enterprise IT sourcing pros have heard the name. Many of us have seen the pitch or read a bit about it, and some of us have participated in purchasing it. But there’s still a ton of confusion surrounding SAP’s HANA offerings. Some say it’s a new database while others call it an in-memory computing platform. We hear it referred to it in the context of cloud-based applications. Proponents sing its praises as a new development environment. 

The bottom line is that it’s all of the above. So, let’s take a deeper look.

Practically speaking, HANA is a new paradigm that founder Hasso Platner and team first demonstrated in 2008. With today’s advances in massively parallel processors and cheap, fast solid-state memory, Platner decided decades-old database and memory management programming rules were outdated. Hence, HANA as an “in-memory” database was born. 

But there’s another more business-driven reason for HANA and it’s big and orange – Oracle. The two companies now compete so heavily on applications and cloud that SAP desperately wants to replace Oracle’s database technology (or Kryptonite) in its customer base. In fact, in a September 2013 blog Hasso Platner went as far as to say, “SAP HANA runs any Oracle based application without any change and mostly significantly faster.” Of course, Oracle has many claims about advances they’re making to their database technology, but they don’t appear to be as foundational.

Sounds great, you say…how do we buy it? This is where things begin to get complicated. HANA as a database is what SAP calls a “non-discountable product” and it comes in on-premise or cloud versions. The most common on-premise offering is HANA enterprise edition and is priced based on GBs of memory needed and 15% of HSAV or “HANA Software Application Value.” HSAV is the total value of the applications running on HANA and the fee is 15% of the purchase price of those applications – which are typically discounted. As you can see the discount you negotiate on the applications running on HANA will have a significant impact on the final price you pay for the HANA platform. And if that’s not complicated enough, there can be other charges for integrating HANA to other platforms (typically 5% or more) as well as many hardware partners selling HANA appliances.

Unfortunately, that doesn’t even begin to scratch the surface of HANA’s cloud based offerings often referred to has HEC (Hana Enterprise Cloud). A look at SAP’s HANA Cloud Platform Pricing and Packages table will show just how complicated this can get with the need to specify the various versions of HANA, connectors, tools, services, hardware, network and storage needed. For even more choices, check out Amazon and other partners’ offerings where you can even pay by the hour of use.

Since HANA is based on new programming techniques and architectures, it also allows for and even requires applications to be redeveloped to fully exploit its benefits. So, in February of 2015 SAP announced SAP Business Suite 4 SAP HANA (or SAP S/4HANA). Now this is where things get even more complicated for IT buyers as SAP S/4 HANA is available in traditional on-premise version (which can also be hosted by SAP and partners) OR in the cloud.
Currently there are three predominant flavors of S/4 HANA in the cloud (available on-premise, public or hybrid):

• SAP S/4HANA, cloud marketing edition,
• SAP S/4HANA, cloud project services edition for the professional services industry, and
• SAP S/4HANA, cloud enterprise edition for full ERP capabilities.

Once again the pricing and terms for these are myriad – based on users and memory for enterprise ERP, revenue for project services, and contacts for the marketing edition. For a look at the five-page terms, they can be downloaded here from SAP’s web site. SAP is also fast at work combining their SuccessFactors, Ariba and other offerings with with HANA strategy, with almost quarterly announcements on integration and pricing. 

SAP has never been “easy” when it comes to purchasing, licensing, deployment or integration. This is no surprise as SAP functions as the epicenter and heartbeat of the enterprise IT ecosystem for some businesses. HANA is no exception to this legacy. Even in the realm of the cloud where simplification is celebrated (and a key benefit), SAP adds its own flavor.

Interestingly, Steve Lucas, global president of the SAP Platform Solutions Group, recently said the following in a WSJ interview, “It’s one of the many, many lessons we learned from our experience in cloud computing—licensing doesn’t have to be that complicated.” Let’s hope he was thinking of the near future.

Have you ever asked your Microsoft account team to help you understand what licenses you own? If so, you may have received a spreadsheet listing the contents of your current Select or Enterprise Agreement. While that information is useful, it’s not complete. It only includes data on what you have bought during the current agreement term. What about the products you bought four years ago? Or ten years ago? 

To achieve a complete view of your Microsoft investment, you need an inventory – something called a Microsoft License Statement (MLS). This little known spreadsheet document is a comprehensive effort by Microsoft to inventory every license transaction made by your company. It’s common to see transactions going back fifteen or twenty years on the MLS. 

There are many reasons why achieving this level of clarity on your Microsoft estate is important. The MLS serves as the basis for your license entitlement during any license review, SAM engagement or audit. Do you have a licensing review coming up? You need an MLS. An EA renewal? You need an MLS. An audit? You better believe it! In each of these situations, the MLS is Microsoft’s starting point, and a point of leverage (for either side).

However, the MLS isn’t always easy come to by – nor is its accuracy guaranteed. Account teams sometimes balk at providing this document to customers. This is due in part to the fact that it’s a confusing and difficult document to explain, even for account managers. Furthermore, Microsoft account teams and licensing specialists are typically more focused on new sales versus your licensing history. The MLS also follows a very narrow interpretation of Microsoft’s licensing rules, which may not match up with the reality of your license position. Sometimes there are errors in the data – a mistake in one field of the spreadsheet can easily create a waterfall effect. 

The MLS document can be overwhelming to digest at first. Fortunately, we can break it down for you. Check out this 15-minute video that walks you through how to get the MLS from your account team, and how to use it to your benefit.

WATCH WEBINAR NOW >> Why You Should Ask for a Microsoft License Statement, and How to Decipher It

When looking for a colocation (colo) provider for your datacenter needs, there are several things to consider when making the choice. One decision is whether to go with a retail or wholesale provider. Both allow you to rent space for servers and other computing hardware, but their business models and pricing/contracting behavior are very different.

Retail provider: Retail colo providers don’t own the actual space where the data center is housed; they pay a landlord. Their services/offerings are based on a watt/sq. ft. rating of the facility. The footprint is determined by the plate rating of equipment (with white space allocated if power requirement exceeds rating) and then priced at a $/sq. ft. amount. 

To these providers, it’s all about winning more market share and they’ll often eat margin in the beginning of a customer relationship to make it happen. But don’t expect those “wholesale” rates to last long (remember, they have a landlord to pay). In more extreme cases, NPI has seen retail colo providers give customers an “up or out” ultimatum after five years, which forces the customer to pay X rate or move out. More likely, you may experience nickel and diming for things like charging to store servers in an empty room, charging for cross-connects or to run cable, etc.

Wholesale provider: Unlike the retail model, wholesale colo providers “own the dirt.” This is extremely important for two reasons, the first being they don’t pay a landlord. The second reason is because the value of a customer to wholesale providers is based on the value an auditor attaches to their tenancy. That value is based on how likely the customer is to pay their bill and stay in business, and how sticky the deal is (length of term and level of customizations). The viability of your tenancy over the long term is crucial while the $/sq. ft. is less important.

So, which model is better? It depends – a tenant agreement may be more enticing than a leasing agreement for some businesses, and vice versa for others. Retail doesn’t care if you contract for one, two or three years. They see the end of the term as an opportunity to raise your rates. On the other hand, wholesale wants a long-term deal with a lot of customizations, which will make it harder for you to leave. Businesses need to understand the tradeoff between flexibility and long-term costs, and how that aligns with their immediate and future data center requirements.