Y'all, A BEEN THERE, DONE THAT, GUIDE TO MANAGING PRICE CHANGES
First, ITSM is a great product backed by a great company--it is the clear choice for doing real backup in an enterprise way--it works very well for a lot of really smart folks. (Credentials: I started out in IBM products almost 10 years ago at Tivoli, I was a principal engineer in sales, then a sales guy, and have now owned an IBM reseller for four years, etc. I have won sales awards at both IBM and as a reseller, have lots of good folks as clients, etc. I have also been through several of these price changes.) This is a cycle--every couple of years IBM goes through a pricing change. While at IBM and as a reseller, I have only seen the best of intentions towards the customers during this process. This takes months to do, is done at very high levels, and is a painful process for the folks at IBM who do this. The problem they face is the changing nature or the hardware platforms, the rise of virtualization, changing of the media, networks, capacities, you name it. They have to counter this with the cost of support, product development, some profit (they have share holders), market capacity and differences world-wide--all very hard things to understand, much less model. So they finally come up with what they think is the best approach. This, like all compromises, generally is a choice of lesser of evils. This new pricing program is then promulgated down to the sales reps and sales engineers and resellers. Pricing changes always result in more work for everyone downstream. Clients, always dislike changes in pricing--as they too have significant investments in time, budgets, and planning. Many now have to reopen the very tough internal process of getting funds allocated. There has been one consistent message that I have heard from CFOs at large and small companies--they do not like "surprises" in fund requests--and software pricing changes often create such surprises. That is the nature of things. IBM has not helped themselves in this process: in the past, they run the existing customers through a spreadsheet (or other model) adjust their bills--then mail them. These price changes will show up in the mail, without someone to explain them in person--with the privacy rules, it is often hard for resellers to know what IBM sends you, so they too may be unaware until after the mail arrives. Here is the been there done that: A. IBM goes to great lengths to train reps on all of the pricing programs and strategies. IBM reps now are usually responsible for a wide variety of products, customers, etc. Given the pressure that they are under, it is very hard for them to know every program, every nuance of pricing, every possible outcome. But rest assured, each IBM rep will want to move earth and moon to keep you as a customer. This gives the first two lessons: 1) Do not panic when your rep tells you anything about price, 2) Listen to what the rep says, they have a lot of say in your pricing--but recognize that there is often more than one way to do it. Do not hang up the phone and tell yourself "well now they have priced me out of IBM"--I have seen folks do that, and the result is always more expensive. B. In every pricing change that I have seen, some folks win, some folks lose--this is the nature of every pricing model--there are always sweet spots. This gives lesson number 3) Learn as much as you can about the licensing program (or find someone who has), talk to as many folks at IBM and resellers as you need to (try to get the ones that have more than a few years under their belts), before you do any audit, or compliance, or any other type of license activity. Often there are very simple things that can be done to reduce/manage your license exposure--a well informed customer always comes out ahead. (Reseller plug: there are a lot of good resellers out there, use them) C. In every price change there is some flexibility in the system. If you pricing goes down--you are in the clear. If your pricing goes up, here is a process that has proven successful in the past: i) make sure that IBM has the proper count/description of each of your licenses. IBM is a large company, with customer entitlement numbers coming from a large variety of sources--make sure the counts are all correct. ii) For larger customers, those with many products, and if you source from more than one vendor--pull all of your licensing together and check that IBM does not have you under two or three (or more) different companies, numbers etc. in their systems. iii) If you have a good understanding of all your IBM software, and how it is being actually used, you are ready for your next step: engage IBM or your reseller on your pricing difference. IBM does not want to lose a customer. There are many, many IBM and reseller programs and strategies that provide compliant ways to reduce your licensing cost that can help you manage your price increase.* This gives lesson 4) Negotiate, don't terminate (sorry, could not resist). Seriously, if the pricing difference is creating trouble, let IBM or your reseller know, they often can do something. The good news: I cannot think of a case in the last 10 years in which we did the homework of counting and checking that did not reduce the IBM licensing cost of a customer. Also in the last 10 years in all of the pricing changes--I have not seen a case in which those that followed the above failed to get a more manageable number. IBM is a very big and vast company--the well informed and active customer can make a real difference in their licensing costs. If your reseller or rep is not helping in this process--take action. An IBM rep can pull in folks who have the experience that can help you, and your reseller can likewise. I hope this helps, and that I did not miss anything. *Those of you with depth will notice that I did not go into deeper strategies or negotiating pricing, it seems that every time I publish that kind of info, someone in IBM takes it the wrong way--so I no longer do that. As a counter (I hope that I do not regret it) folks can call me if they want more detail or with questions (please be sensitive to the fact that we have had other resellers (some very large) as clients--there will be no recruiting or sales attempts--we do not work that way). -- --David Moring www.backupinsight.com (A Division of Applied Autonomics LLC) 512-782-HELP [EMAIL PROTECTED]
