Are you running around like a buzzing, busy bumble bee all day chasing suppliers for quotes? Stop it. There is no need. When it comes to the long tail of software used in your organisation, there is no reason to manage this in-house. Take the time to carefully select a software reseller, then setup clear internal policies and procedures for when and how the reseller should be used, and forget the daily management of all low value transactions.
However, not only do you get all the low value stuff off your plate, you can also use the reseller’s expertise and services to manage that long tail more efficiently.
5 Tips When Using Software Resellers
Here are my top 5 tips for how to get the most value out of using a reseller to process software transactions:
Treat the relationship with your software reseller as one of trust and confidence. You need to have a high degree of trust in the reseller in order to get the best out of the relationship and that trust has to be fostered on both sides. Share your pain points, your concerns and your desired outcomes. Do not try to squeeze the reseller solely on price. The software reseller must see value in doing business with you in order to maintain a quality service.
Ask for quotes on a sample of the business you would like to move to the software reseller. Compare this with your own pricing with these software vendors and identify any vendors where the reseller has cheaper pricing. If you there are big discrepancies, increase the size of the sample, keep investigating and discuss with the reseller to understand where the price differences come from. You should aim to benefit from all cost improvements that the reseller can offer whilst maintaining your own costs (plus a small margin for the software reseller) on the rest. Do regular spot checks to ensure that you continue to get competitive pricing.
In situations where you know the cost (either because you negotiated it, or because it was historically a transaction that was done directly with the software vendor) agree a low percentage margin with the reseller. Remember the reseller’s business is all about volume. Their margins should be thin enough for it to make sense for you to push business their way. Where you have already done the work and the reseller is simply processing the transaction, the cost of that should be minimal.
Negotiate a cap on the margin per transaction. The cost of processing a $100 order or a $100,000 dollar order should be the same for the reseller, so it should be easy for you to get the reseller’s agreement on limiting the cost per transaction. Liability for a software reseller is limited because you (the customer) will be agreeing to the software vendor’s licence terms. So don’t accept arguments for higher margins based on the reseller being exposed to liability.
Include a requirement to provide detailed reports in the contract. Many software resellers also provide Software Asset Management (SAM) services. The expertise of a software reseller in this field will help you gain insights into what is being used in your organisation with minimum effort on your part.
If you carefully select a good software reseller, the time you free up can be devoted to more strategic vendors where bigger savings can be made or where a time investment in the vendor relationship makes sense.
What is your experience of using software resellers? Drop a comment below, or in the SoftwareSpend group on LinkedIn.
Image credit: Italy-2153 – Capo Street Market by Dennis Jarvis, creative commons, Flickr.com