How have you been using your vendor partnerships to navigate economic pressures? Are you renegotiating contracts, consolidating vendors, or exploring new pricing models?
Sort by:
When navigating economic pressures, it's essential to leverage your vendor partnerships strategically. Start by reviewing existing contract language and mechanisms, as these are already in place and can provide a solid foundation for negotiations. Look ahead to upcoming purchases that may be impacted by tariffs and consider moving them up ahead of any announced tariffs to protect pricing. Engage in open discussions with leadership about pricing sensitivity, ensuring they understand the risks of delayed decisions and potential cost impacts. Approach these conversations constructively, focusing on budget and prioritization rather than using them as a tool to pressure for immediate decisions. This way, you can foster a collaborative environment that prepares your organization for unexpected challenges.
With some vendors contracts can contain clauses that limit the amount of pricing increase at renewal or annually. This helps a bit. Yes, customers have the most leverage to get such language at the time of the initial purchase or increasing spend in the same or other areas with a vendor. Otherwise probably not possible at all.
Mike
I foresee a resurgence in the "build your own" approach, which could significantly alter the SaaS vendor dominance we've seen over the past decade. This shift might encourage organizations to develop their own solutions, potentially changing the vendor landscape.
We aren't actively renegotiating, but we've been consolidating vendors and centralizing operations as a standard practice. It's important to distinguish between vendors and partners. We value partners who add significant value and engage in discussions about fair pricing, whereas vendors are more transactional. This strategy has been in place for several years, and the economic pressures haven't changed our approach. It's simply part of good practice.
When discussing vendor partnerships and price reductions, the focus should be on the relationship. As Dave mentioned, larger gains aren't achieved by merely optimizing contracts; it's about reducing or eliminating several contracts to achieve the desired numbers. For strategic partners, it's crucial to work with them to add more value to existing contracts. Many SaaS contracts have locked-in prices, limiting the ability to renegotiate costs. Instead, focus on extracting more value from these agreements rather than solely renegotiating prices. Multiple approaches can be taken to achieve this balance.
We did renogotiate contracts with our top vendors. As we consider them partners, we want to ensure they all contribute to mitigating economic pressures. We also made sure to understand the cost structure of the major contracts and worked on changing our approach in some cases. An example of that would be redesigning a portion of our transactional systems so it doesn't ping the mainframe too often while still providing the same functionality, since our mainframe contract is structured on the number of mainframe calls.