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Strict SLAs to Fortify 'Vendor-CIO' Partnership: Duncan Jones, Forrester

Yogesh Gupta | Sept. 27, 2013
Duncan Jones, Vice President, Principal Analyst, Sourcing & Vendor Management, Forrester speaks about how to make good choices between alternative solution providers and get the best results from implementation.

In the older (On Premise) model, vendors sell license and then more licenses. In Opex, the supplier is more concerned that you are successful with their product as the subscription accordingly grows each year. CIOs should plan to grow this relationship and reward the vendors with more investment.

Uncertainty about price hike is a pitfall with Opex. Enterprises are vendor locked in and the renewal price on an average is 40 to 70%. They have little choice but accept the new price because they cannot migrate to another technology.

Vendor companies seldom indicate the future hike for subscription model in SLAs.

They could do it but they prefer not to mention it. However technology buyers will become more mature as they demand the indicative price after the initial subscription period. They would need some price protection or some exit strategy from the vendor. That's the main pitfall.

A particular customer utilising SaaS from a vendor company (which was undergoing acquisition before renewal period) faced a huge problem. The delay from the new company alliance resulted in 70% price hike - couple of months before renewal period. It was too late for the customer to negotiate with the current company or migrate to another product company.

 

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