Have a Cisco purchase or renewal coming up? Here are four questions to ask prior to any Cisco contract negotiation:
#1: Is your reseller incented to get you the best deal?
Resellers get paid a percentage of the list price of your purchase. Their compensation is the same no matter the discount you receive. Also, Cisco protects their resellers. Once one is chosen, other resellers will not receive the same discounting, so receiving multiple bids from resellers will not result in better pricing or leverage. Cisco’s Partner Program rules and their “OPC” (Other Product Clause) state that only the incumbent partner will receive the full discount for the 1st year of a support contract sold. One of the keys to successfully negotiating a large Cisco purchase? Work directly with your Cisco sales representative.
#2: Before going into a Cisco contract negotiation, do you have viable and credible alternatives?
Credible is the key word here. Once you become a Cisco shop and continually refresh equipment, Cisco effectively becomes an order taker – and that means you lose a ton of leverage. Cisco, like many other vendors, is well versed in handling objections during negotiations and, unless they feel they have to increase discounting to get the deal done, they won’t. Therefore, looking into alternative solutions and even performing a proof-of-concept can be very beneficial during a Cisco contract negotiation.
Speaking of alternatives…is third-party support on non-critical equipment (or equipment reaching end of life) a viable option that can be separated from your SMARTnet renewal? This can be a cost saving measure and help to keep Cisco on their toes.
#3: Is Cisco looking at your total annual spend during refreshes, or at individual purchases?
Many customers receive erratic discounting based on the size of each individual deal. Pushing Cisco to look at the total annual spend could result in better discounting as long as there are alternatives or other leverage points as discussed above
#4: Have you discussed receiving a standard set of discounts with Cisco regardless of the size of the individual purchases throughout the year?
Depending on your volumes and credible alternatives, Cisco does have the ability to put together a customer agreement with consistent discounting that’s based on each product family or bundles most frequently purchased by your organization. The best time to bring this up is during a large negotiation when you have the most leverage.
As always, don’t forget to conduct price benchmark analysis on every Cisco purchase and renewal to ensure pricing and discounts are at or below fair market value pricing targets. It’s tempting (and easy) to go on autopilot with a legacy IT vendor and assume your next deal will be as fair as your last one. Unfortunately, it’s also a fast path to overspending.