The adage goes: "The more things change, the more they stay the same." Although technology moves at a rapid pace, the predatory behavior of software vendors does not really change. Certainly, it works for them as the numbers show:
- Microsoft net income: $44.2B
- Oracle net income: $14.1B
- IBM profit: $5.6B
Not coincidentally, these are the top 3 suppliers most likely to audit you according to a recent ITAM study of 465 IT Executives conducted by Flexera.
This fact comes as no surprise to us, as we wrote about this in 2019 in an article titled: The Top 10 Audit Crazy Suppliers, where our top 3 mirrored the IT Executive survey exactly. In fact, 9 of our top 10 were the same suppliers this study reflects, which is further evidence that, the more things change…..
Image Source: Flexera, State of ITAM Report 2022
….the more they stay the same.
When you review the net income and profits of these companies, you can see why they spend tremendous resources in coming after customers with audits. The game is somewhat rigged in the sense that the problems associated with audits, are often quietly encouraged and propagated by the suppliers themselves. They create the shifting and confusing environments, only to circle back and prey on the results later by presenting themselves as the 'solution' to all your problems:
- Constantly changing product skus
- Updating license ‘mix and match’ bundles frequently
- Changing, vague and confusing licensing terms and policies
- Sales teams that misrepresent terms – without repercussion
Results of Game – You Lose
24% of these surveyed respondents have spent $1M+ to settle unbudgeted audit issues, and almost 10% have spent more than $5M.
Gamblers have been heard to say, “the house always wins”, meaning that the casino in the long run always wins more than they lose. Much, much more. The same is true for software suppliers in that they almost always ‘win’ the audit game when left unimpeded.
Penalties and true ups are only part of the game. What the report above does not share, is the long-term impact that poor negotiating during an audit can have on spend for years to come. Oracle, as you likely know, is notorious for leveraging audits to shift customers to cloud products and other areas of business they want to shore up for Wall Street. Measuring that kind of loss (lock-in to wrong product mix, the wrong price, unfavorable terms. etc.) is much more difficult and far reaching.
Flip the Game Board Over
You don’t have to be the ‘loser’ however, even when dealing with mega-corporations that spend billions on ‘sales and marketing’ to guide industry thinking (often paying the very people you rely on for advice). Beyond the pre and proactive planning that should be done in the scope of a sound SAM practice, there are couple simple steps to be taken when you do get that audit letter:
- Don’t respond
- Call us
Yes, number two may sound self-serving, but it is Client serving as well. We specialize in audits from all the top 10 suppliers listed previously – especially Microsoft and Oracle. We know how they operate, strategize, and behave in the process which is the difference between ‘thinking’ you won – and actually winning. Vendor sales teams train long and hard to make you think you’ve won and even feel good about it, until several months later when costs, risk, and lock-in are all worse off than before you started.
So, change the game and enlist experts to help you navigate the process.
- When you have legal issues, you call a lawyer.
- When you get hurt, you call a doctor.
- When your car stops working, you call a mechanic.
The same rule should apply when your contract or supplier needs repair, call an expert. It will cost you far less than ‘self-diagnosing’ and negotiating on a playing field that is set up and managed by the very same organization that helped create (encourage?) the problem.
We review, negotiate, and optimize more strategic technology agreements in a month than your organization likely does in a couple years. We know the game and play it better than anyone. Those that we already work with can tell you, our ROI is typically measured in the several hundreds and thousands of percent. So in the end, you will actually be the winner, rather than just think you won - and that makes all the difference.
Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get and keep more economic and strategic value. With over 2,500 clients around the world in nearly all industries and geographies, and with the experience of over 25,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, resulting in incremental client captured value in excess of $250 billion since 2002. NET(net) has the expertise you need, the experience you want, and the performance you demand. Contact us today at firstname.lastname@example.org, visit us online at www.netnetweb.com, or call us at +1-866-2-NET-net to see if we can help you capture more value in your IT investments, agreements, and relationships.
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