How to Lock In Recession-Era Prices
When You Don’t Have Cash to Spend
April 9, 2009 (Vol. 30, No. 8)
The recession has worked wonders for telecom equipment pricing.
Vendors are “much more willing to negotiate on the pricing” today, notes Doug Carolus, director of consulting services and operations at Minneapolis-based technology consulting firm N’compass. Discounts of 40% used to be “table stakes” for communications technology negotiations, but now the average is closer to 50% and some enterprises are scoring deals better than 60% off list prices on first-time procurements, he says.
Use the economic downturn as a time to assess your current infrastructure and how well it matches up with end user needs, Carolus says. It’s especially pertinent advice if you, like most of the enterprises Carolus has encountered in the last 10 years, don’t have a good grasp on the recurring costs of your voice infrastructures, what software releases you’re running and when your equipment is slated for end of support and life.
Then start shopping – even if you don’t have capital funding available to make purchases today, Carolus advises. Identify your preferred channel partners and manufacturers and solicit their best offers. The environment is so stacked to the buyer's advantage that “even if I loved the incumbent, I would still do a competitive procurement,” Carolus says. Or pit channel partners against one another if you’re totally committed to sticking with your system manufacturer.
You don’t have to cut the check right now. Instead, ask vendors in your RFP whether they’d comply with a requirement that the prices they quote will be valid for 6 months or 12 months, depending on when you expect your budget to loosen up, Carolus suggests.
Don’t ignore options like financing and leasing, which Carolus reports many more enterprises are considering now. And don’t push your vendor so hard on price that it loses the flexibility or incentive to solve problems during implementation without change orders. (