The Skinny on Fiscal Year-end IT Purchases

By Gregg Spivack

Director of Client Services, NPI

April 26, 2016

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In the enterprise IT space, the last two weeks of any given month are the equivalent of Black Friday (or Cyber Monday now). Pick a month and you can bet it’s some behemoth vendor’s fiscal year-end, and deals are to be had for those purchasing with that vendor. These deals are often driven by Wall Street’s earnings expectations, but the more tangible driver is the salesperson’s sales commission (also quarterly/FYE driven).

Here's a sampling of vendors’ FYE:

  • January:, Workday
  • February: Red Hat
  • March: BMC, Symantec, McKesson
  • April: NetApp
  • May: Oracle
  • June: Microsoft
  • July: Cisco
  • September: Avaya and Kronos
  • October: HP
  • November: Adobe
  • December is the most common FYE and includes Check Point, Citrix, IBM, EMC, VMware, AT&T, Verizon and SAP
  • What makes this both a great and treacherous time for a purchase is the immediacy and urgency that typically surrounds these transactions. While some vendors are more apt to offer better pricing and discounts, they often come with ominous vendor messaging. In some cases, vendors are leveraging compliance as a motivator to buy/renew. In the very least, it’s the threat of a lot more expense if the transaction happens beyond the end of the month.

    What a purchaser can never really know is where their salesperson or the company are in terms of meeting their revenue targets. NPI’s advice is to ask – you may learn something of interest (which can translate into buying leverage). Our experience shows, for some vendor sales teams, there's almost as much motivation in starting off the next quarter with a big sale compared to ending the previous quarter with one.

    However, in the pressure to buy on a timeline, many companies forget to slow down and acquire the proper information about their own IT needs. Have you tried to look ahead to forecast need especially for items that often involve quarterly buys or regular upgrades? Have you taken stock of the rest of your footprint with said vendor to determine if there are any inefficiencies that can be addressed during this EOQ transaction when leverage is present? EOQ purchases often involve accelerating an expected future purchase up one or more quarters. This creates great storylines around shelfware risk, paying for support prior to go-live, and eliminating any alternatives from being considered.

    While we all love a great deal, FYE and EOQ IT purchases don't typically come with money-back-guarantees. Take advantage of the opportunity, but be knowledgeable. The adage “haste makes waste” is very appropriate when it comes to rushed IT purchases, and that waste can easily cost you six or seven figures. Know which levers to pull and proactively prepare as much as possible.