Buying IT through a reseller has its advantages – and it also has its pitfalls, one of which is the registered deal. Here’s how it works…

Many IT manufacturers, whether hardware or software, only sell through channel partners. When that occurs, the first reseller contacted by a customer will register the deal with the manufacturer. At that point, they will be the only channel partner to receive special discounting. That’s all well and good, unless the customer is inviting other resellers to the table.

These days most organizations require three bids for every purchase, unless IT/procurement has successfully provided sole source (which can be pretty hard to do). When the first reseller invited to the table registers the deal with the manufacturer, the customer inadvertently creates a “sole sourcing” situation. It’s difficult for any other reseller to match the first reseller’s pricing, and establish fair pricing targets and a truly effective buying event.

There are a few measures that can be taken to ensure a competitive bid between resellers. If you are unhappy with the reseller that registers the deal, you may request to have the deal unregistered in order for another reseller to get the best pricing. However, bear in mind that the manufacturer will NOT make that process easy. Manufacturers that only sell through the channel will do everything they can to protect their relationship with their partner and will discourage your request or ask you to wait for 90 days until the registration expires before selecting another reseller. If you want the vendor to unregister your purchase within the 90 days, you will need to build a strong business case by citing specific business reasons, such as lack of responsiveness or performance, or other reasons that affect your ability to work with that reseller.

The moral of the story is this – When purchasing solutions through a reseller, be very selective on the reseller you discuss the opportunity with first. Be aware that they may immediately register the deal in order to lock in the best pricing and lock out any competition.

As Workday approaches $7B in annual revenue, it’s obvious that this nice cloud ERP/HRM story has become an IT stalwart. One sign of this maturation is the growing number of renewals NPI has reviewed – in the early days, we were just reviewing new purchases. While each contract situation is unique, following some basic tenets can help optimize your outcomes:

Even though Workday is a SaaS solution, the implementation is a serious undertaking that often costs well into seven figures for large enterprises. Just like any software purchase, the opportunity to strike your best deal is during the initial purchase. Be sure to consider how you want your contract to behave for at least the first six years (Workday typically signs three-year contracts, and that first 3 years goes by quickly!).

• Workday only performs about 20 percent of its implementations. The rest are handled by partners who must undergo rigorous certification. Consider utilizing Workday’s delivery assurance services to perform checkpoints and ensure a successful implementation.
• If you’re readying for a renewal, be prepared to be presented with a new master agreement (MA). Limitation of liability is one area you’ll want to compare to your original MA. And historically, Workday has eschewed a modular approach and has resisted a la carte sales, although exceptions were made. The newer MA clamps down further on this, making it tougher to carve out any unneeded modules.
• As mentioned earlier, Workday regularly agrees to three-year terms. At renewal time, double-digit increases are not uncommon! Workday will consider renewal terms which can govern years four, five or six years – so be sure to make that a focus of your contract discussions.
• Workday continues to enhance their offerings beyond core HRM/HCM. If you’re looking to expand your Workday deployment to include these new enhancements, time your expansion around your core services renewal to lock in the most favorable terms.

There’s a lot to consider whether you’re entering into your first Workday contract or an upcoming renewal. Just remember that Workday’s terms and flexibility are evolving as the company enters IT-giant waters. What constituted an optimized purchase for your business three years ago may look a bit different today. Taking a long-term view, and capitalizing on Workday business objectives that are aligned with your own is critical to investing wisely.

What happens when your cloud service provider suffers an outage? The question was on more than a few minds this Monday when Microsoft’s Azure cloud computing service experienced a global outage that lasted approximately five hours. If you’re an Azure customer, or are considering migrating to Microsoft’s cloud services, here are a few things to consider: 

Microsoft is on the hook for SLA penalties, but it will take some effort to claim them.Microsoft will pay a penalty for Azure downtime that falls outside of their Service Level Agreement (SLA) requirements, but the process for collecting those penalties is cumbersome to say the least. Here’s an example:

• In order to be eligible to submit a Claim with respect to any Incident, the Customer must first have notified Customer Support of the Incident, using the procedures set forth by Microsoft, within five business days following the Incident.
• To submit a Claim, Customer must contact Customer Support and provide notice of its intention to submit a Claim. Customer must provide to Customer Support all reasonable details regarding the Claim, including but not limited to, detailed descriptions of the Incident(s), the duration of the Incidents, the names of affected databases, failed operations, and any attempts made by Customer to resolve the Incident.
• In order for Microsoft to consider a Claim, Customer must submit the Claim, including sufficient evidence to support the Claim, by the end of the billing month following the billing month in which the Incident which is the subject of the Claim occurs.
• Microsoft will use all information reasonably available to it to validate Claims and make a good faith judgment on whether the SLA and Service Levels apply to the Claim.

Microsoft’s SLAs change often and without warning. Microsoft SLAs change frequently and customers are rarely notified directly. That means it’s up to customers to stay on top of changes. Keep in mind there are 20 different cloud computing services under the Azure platform, all of which have their own SLA. 

You also need to understand terms for termination costs and transition assistance.  Sometimes, it takes an outage for a company to realize the risk of IaaS is simply too great for them to bear, or that it’s time to switch vendors. Specifying termination costs and data transfer guidelines upfront in the IaaS sourcing process makes it far less painful and costly.

If you’re considering a move to the cloud, or extending more of your IT environment in that direction, check out this white paper on how to optimize service, pricing, and contract terms and conditions.

IT vendors have long been criticized for the complexity of their licensing agreements and pricing – especially by large enterprises that have to manage large vendor footprints across their organization. In response, some vendors have created enterprise-friendly programs and agreements designed to make purchasing and license management easier and less costly. For IBM, this comes in the form of IBM Passport Advantage.

IBM Passport Advantage differs from other enterprise-style agreements (such as the Microsoft EA or Oracle EULA) in that it’s more of a program than a contract option. While its intentions are good, many customers are unsure how it works, whether they qualify and whether their organization would garner any cost benefits from the program. 

Eligible products available under the Agreements include software licenses, both One Time Charge and Fixed Term, Software Subscription and Support, plus IBM Appliances and IBM SaaS offering

So, what is it exactly? IBM Passport Advantage (PPA) is a common set of agreements, processes and tools that covers software licenses (one-time charge and fixed term), software subscriptions, software support, IBM appliances and IBM SaaS offerings. It is designed to allow businesses to acquire software and maintenance services in a manner that matches their needs. A business can order a single platform or many platforms; one product or entire suites; for one location or a network of offices around the world. There is a PPA solution to match the way your organization manages software and services, whether you are a small company or a large international corporation.

How does it work and what are the benefits? The PPA program allows customers to receive discounts for IBM software purchases based on their purchase volume over time, and based on the size of individual transactions. There are also options to acquire groups of products to be deployed across an enterprise on a per-user basis. IBM PPA includes software maintenance, which provides support as well as upgrades as new releases are introduced. It also includes cross-platform migration coverage for all IBM software. With IBM PPA, you receive a personalized web portal where you can view your account history and proofs of entitlement.

How exactly are better discounts acheived?  Each acquisition under an IBM PPA is evaluated based on two criteria: the size of the current transaction and the amount of current business you’re doing under Passport Advantage. You receive a Relationship Suggested Volume Price (RSVP) level based on your initial acquisition of licenses and software maintenance under the program. IBM will then review your RSVP level during each annual renewal to determine if the accumulated acquisitions during that period qualify your business a higher RSVP level and, therefore, better pricing. Customers who qualify for RSVP level of “D” or above may also qualify for even higher discounting for a specific transaction depending on its size. This is known as the Transaction SVP level, or TSVP. The larger the transaction, the better the TSVP. If eligible, you will always receive the better of the RSVP or the TSVP for your transaction.

Want to learn more about IBM Passport Advantage and how it can benefit your unique computing environment? Contact NPI. We can help you determine eligibility and the actual cost savings it will deliver. We can also optimize your existing IBM PPA contract to secure best-in-class discounts, pricing and terms.

If you’ve bought hardware lately, there’s a good chance you’ve purchased it through a reseller. Buying through a reseller has its advantages, but it also adds another layer of complexity to the process. In some cases, it challenges the sourcing best practices many buyers use for direct-from-vendor purchases. 

For example, many companies’ procurement policies require three competitive bids for price comparison (or justification for sole sourcing). That best practice serves its purpose in a direct purchasing scenario, but doesn’t always get the job done when a reseller is involved. Here’s why…

Resellers are highly motivated to register their deals with hardware vendors. This ensures that resellers get special bid pricing, which typically translates into better pricing for the buyer (as well as higher margin for the reseller). The problem is that this “special pricing” is only given to the first reseller to register the deal. Every bid thereafter will be higher by design. In other words, when a hardware vendor allows the first reseller to register a deal to obtain special bid pricing, you are essentially sole sourcing the purchase. This certainly helps the vendor and reseller secure the revenue and profit margins they want, while removing the competition and your leverage to obtain better pricing.

There are a few ways to combat this. First, if there are viable alternatives to the vendor’s solution, look into them and use that as leverage. A Cisco reseller will be more inclined to lower price if a Juniper reseller is brought to the table. Second, tell your reseller not to register the deal with the vendor. Remember, deal registration is a tactic used to reward resellers for creating revenue opportunities – the reseller secures lower pricing, but can also pad the pricing with extra margin before a final bid is passed to you.

Finally, allow market experts to benchmark your purchase to see if it is in line with fair market value pricing. Just because your reseller was the first to register the deal with the vendor doesn’t guarantee you’re getting best-in-class pricing, and not every reseller will agree to forego deal registration. This additional pricing insight will level the playing field.

Most enterprises are aware of Amazon Web Services (AWS), which has hundreds of thousands of customers. But many are unaware of just how extensive AWS’ offerings are across the broad spectrum of IT capabilities. 

AWS is a wholesaler that delivers compute cycles from their cloud data centers at a very low price. They offer services that will run your entire IT environment (compute, networking, storage, database, application services and management) from the cloud and reduce your on-premise hardware footprint. 

So how did an online retailer become an IT giant? After over a decade of building and running the highly scalable web application Amazon.com, the company realized that it had developed a core competency in operating massive scale technology infrastructure and datacenters, and embarked on a much broader mission of serving a new customer segment—developers and businesses—with a platform of web-based services they can use to build sophisticated, scalable applications. 

In 2006, AWS officially began offering developers access to in-the-cloud infrastructure services based on Amazon’s own back-end technology platform. This catapulted infrastructure-as-a-service (IaaS) to a new level of availability and visibility within the enterprise sector. Before AWS launched in 2006, businesses would take on the significant capital investment of building their own infrastructure, or contract with a vendor for a fixed amount of datacenter capacity that they might or might not use. This choice carried the risk of paying for wasted capacity or having to worry that the amount of capacity they forecasted was insufficient to keep pace with their growth. 

AWS has changed the game by offering a comprehensive and proven new way to implement and manage business technology infrastructure. . The services that AWS offers are based on Amazon’s own back-end technology infrastructure, which they’ve spent over a decade building into one of the most reliable, scalable and cost-efficient web infrastructures on the planet. The AWS platform has grown rapidly since the first service launch in March 2006, and it is now the underlying infrastructure for businesses around the world – from start-ups to enterprises to government agencies. 

Here are some “pros” to consider when evaluating the benefits of AWS:

• More than 5x the compute capacity in use than the aggregate total of the other fourteen leading providers in the market
• 7 years in the market with hundreds of thousands of customers in over 190 countries running every imaginable use case on AWS
• Groups of data centers, which it calls “regions,” on the East and West Coasts of the U.S., and in Ireland, Japan, Singapore, Australia and Brazil; it also has one region dedicated to the U.S. federal government
• Attained most industry standard compliance certifications: HIPAA, SOC 1/SSAE 16/ISAE 3402 (formerly SAS70), SOC 2, SOC 3, PCI DSS Level 1, ISO 27001, FedRAMP, DIACAP and FISMA, ITAR, FIPS 140-2, CSA, MPAA
• Thousands of independent software vendors like SAP, Oracle, Adobe, Microsoft, Esri, etc. have made their software available on AWS to customers along with go-to-market partnerships with system integrators (such as Capgemini, Cognizant and Wipro) that provide both application development expertise and managed services

But, is AWS for everyone? Maybe not. Here are several considerations to keep in mind:

• The learning curve for a software-defined data center is sometimes steep for larger enterprises
• Billing is extremely confusing; NPI recommends going through a reseller for a more detailed monthly bill
• AWS does not include enterprise-grade support by default. Customers will need to buy Business tier support for this, which carries up to a 10% premium on the customer’s overall AWS spend
• Almost all enterprise customers require a custom agreement (vs. the click-through agreement online), and significant terms-and-conditions negotiation
• Have experienced high profile outages in recent history

There’s no argument that AWS has transformed the way companies consume IT. But that doesn’t mean the process of buying and managing AWS’s offerings is easy. Like any IT purchase, it’s fraught with pitfalls – especially if you’re not one of their largest customers. Many small and mid-size enterprises are unable to get the support and guidance of an AWS representative. 

If you a current customer of AWS or you are evaluating their services, NPI can guide you and help optimize your spend. Our insight into AWS contracting and negotiations will enable you to get the most from your investment and maximize flexibility throughout the duration of your contract term.