How to negotiate the best deal on your ERP system
Negotiating a good deal on any new purchase is important but never more so than on a major ongoing purchase like business software. As a company that is involved in contract negotiations on a daily basis, we’ve seen all forms of negotiation tactics, all driven by the right intention of negotiating the best possible deal on an ERP system for the buyer. We can’t argue with that – we’re all in business to make a profit! What we would disagree with, though, is what makes a good deal (hint, it’s not just about the final price.)
Whilst we’re approaching this from a software vendor’s perspective, not a buyer’s, we genuinely want our customers to get what they need to run their businesses more efficiently. So that’s why we’re sharing these 5 tips to enable you to negotiate the best deal on your new ERP system. Have a read and we look forward to seeing you on the other side of the negotiating table very soon!
1. Know exactly what you need, now and in future:
Before investing time and money in new software, you need to make sure it is aligned to your current and future business goals. Consider what you need now, and then 2, 3, 5, even 10 years down the line (think licences, functionality and features). Estimating what you’ll need further down the line puts you in a stronger position as you can negotiate on these higher volumes, and means you’ll keep your costs down throughout the life of the contract.
2. Don’t ask for the total cost to be reduced straight away
Yep, that sounds like advice a typical ERP software vendor would give but hear us out – by asking for a reduction in the total cost, most ERP providers instantly suggest dropping training days, cutting consultation services or even turning off some of the functionality in their system. They know, that in order for you to get the optimum performance from your new system, at some stage you’ll need to book those training or consultation days in (at a cost) or turn on (and pay for) the additional functionality. If this is a capital expenditure cost, you don’t want to be incurring further hefty ongoing costs at a later date. Instead of asking for a discounted price, ask for more value.
3. Ask for more value
By the time you’ve reached this stage in the project, an ERP vendor will have a solid idea of your budget and should be able to put together a suitable option for your business. Chances are it will be close to the top end of your budget. This is your opportunity to increase the value of the deal. Negotiate for extra training and consultation days – the more time and resource allocated to your project will mean a smoother implementation and better use of the system going forward. Are there any other modules that you can use – like SFDC, scheduling or planning? Trying to pack as much added value into the deal is often a better option than trying to discount the total price.
4. Don’t skimp on functionality
You’re making a significant investment in your company’s future with an ERP system and the last thing you want to do is compromise on functionality for the sake of saving a few £££s. If your budget really can’t stretch to these costs at the initial stages of the project, negotiate to have all the functionality or modules you’ll eventually need installed but switched off and only pay for them when you activate them. By bundling all the functionality in at the start, you can avoid price increases and the disruption and additional installation expenses of having these added at a later date.
5. Roll in future maintenance costs to your upfront project cost
If you are working to a set CapEx budget and the upfront project cost is coming in below this, it’s worth considering asking to roll in the following year’s maintenance cost. Offering to pay this upfront puts you in a stronger negotiating position and, whilst it brings your upfront cost up slightly (yet still within budget), you can often reduce the cost of maintenance for year 2 and have nothing further to pay until Y3.
Negotiating the best deal on your ERP system comes down to looking at value, not price. By adopting the above tips to obtain greater value across the longer term (and with ERP it is all about the long game), you’ll save more money than you could ever achieve through price discounts on the upfront costs and reduce the true cost of your new ERP system.
The E-Max team is keen to work with our customers to get them the best possible deal on our top manufacturing ERP system, E-Max ERP. Find out more about what E-Max ERP can offer by having a chat with one of our experienced ERP consultants on 0808 109 2035, drop us a message or visit some of the other areas of our website. We’re also delighted to take you through a no obligation demonstration of E-Max ERP at a time convenient to you.