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Now's the time to pressure vendors for better deals, even if your contracts aren't up. -- Ken Harris, CIO, Shaklee |
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Among things to look for are whether software licenses are for duplicate copies, older software that's rarely used, more seats than are actually needed, or maintenance for off-the-shelf software. "Are you paying maintenance for software you don't use?" he says. "Without zero-base budgeting, you tend to overlook this sort of thing."
On the hardware side, companies often have more capacity than they realize and tend to pay maintenance on more machines than they need. "Maybe we have 47 machines but can get by with only 43," Harris says. "That's the sort of question that zero-base forces you to examine."
Mark Ricca, a senior analyst at research and consulting firm Intellicom Analytics, agrees that an economic slowdown is a good time to take inventory and assess needs. But business technology leaders must be mindful of staff morale and the tone they're setting. "We're not pushing the panic button," he says. In renegotiating with vendors, he recommends looking for service contracts and software licenses expiring or coming up for renewal--in the data center in particular. "Security, storage, network, software, hardware--look at everything in the data center," he says. "There are deals for everything you need." That's because during economic slowdowns, many providers of IT products and services become more flexible with their pricing and discounting policies. "There are bargains offered during these periods that aren't available during booming, high-demand periods," Ricca says.
Intellicom Analytics itself recently struck a network services deal that's "20% less than what we were paying for the same service, with the same provider, for the previous two years," says Ricca. In working with clients to acquire network services, new IP telephone systems, and communication applications, Ricca says he's noticed more willingness from vendors in the last two years to negotiate discounts, which he attributes to "the economic slowdown and their need to keep business coming in."
Cautiously optimistic or not, business technology managers need to meet the coming economic challenges head on, and not wait to get the call from the CFO. "There's a rocky road ahead," predicts Nucleus Research's Wettemann, so making smart investments in IT are key. For example, on-demand services can save money up front on software and hardware purchases and require less employee support, freeing up those people to focus on other critical work, she says.
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