Pricing For Enterprise Software Solutions

In my line of work I deal with buyers from purchasing departments of multinationals requesting pricing for enterprise software solutions. Supplying a price is often a little more complicated than looking it up on a price list. In reality it involves a lot more.

Before supplying a price to the buyer, it is essential to understand  their business requirements for the software solution. What follows is a scaled down version of the entire process followed for every enquiry.

Understand Business Requirements

To understand the business requirements a series of meetings are held with all the business stake-holders involved. During this process the business problem(s) are documented and possible solutions noted. Meetings are also held with stake-holders from the IT department to obtain their input and discuss the current hardware configuration and surplus capacity within the organisation.

All too often the IT department is classified as a cost centre and not a business unit. When this happens they are frequently never consulted about future software solutions to be purchased. This often results in projects running out of time and over budget. Fortunately this view is changing and we are seeing more organisations that accept IT as a business unit contributing to the value of the organisation.

During discussions with the IT management and business stake-holders licensing of the solution is worked out and the following information is noted.

• Number of technicians that require access to the solution

• Number of PC’s, laptops and servers used in the organisation

• Hardware requirements for the solution and the cost estimates to purchase the hardware.

• Enterprise solutions are modular. During these discussions the business stake-holders elect the required modules.

Hosting Solution

Many of the large enterprise solutions are now being offered as a cloud based solution, eliminating the need to purchase costly hardware and operating systems. However, cloud based software solutions are not accepted by many companies for security reasons. In some cases organisations do not want a third party managing their data while others are more concerned with the fact that their data is being stored on servers on another continent.

The anti-cloud lobby is still very strong and all the major software vendors are aware of this. Therefore, they support solutions that target both segments of the market.

Hidden Agenda

During the meetings with the business stake-holders hidden agendas are often uncovered. A prime example of a hidden agenda involves business managers from different divisions favouring products because they have used them before, instead of selecting what is best for the entire organisation.

Another example of a hidden agenda is the practice where managers vote for a given solution for company political reasons to further their career instead of selecting what is best for the organisation.

Budget Availability

Now that the vendor has all the business requirements for the solution he is able to work out a provisional cost for the software. He will also include his professional services to install and configure the software and train the users of the software. Additional costs may also be added for the migration of data from the old system to the new solution.

Solution Selection Process

The solution selection process is a very busy time for the teams assigned to the products that reach the short list. During this phase the following processes need to be completed before the final solution is provisionally selected.

• Evaluation of the solutions that made the short-list.

Document advantages and disadvantages in terms of the business requirements.

Documenting the hardware and software requirements for the solution.

Call for quotations.This is the first time that pricing for the solution is supplied.

Prepare and submit a proposal.

Solution presentation by the vendor.

Final Solution Selection

The final solution selection is normally done at board level after the business stake-holders have given their input. This is a process that can take a few days or extend over a period of months. Further delays can be caused when budgets for the new solution are only available in the new financial year.

 

 

 

 

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What Is Infrastructure as a Service in Cloud Computing?

Infrastructure as a Service is a provision model in use by business to outsource hardware requirements. The cloud provider owns the equipment. The client pays for usage.

Introduction

In defining Infrastructure as a Service we need to understand the specific features that a cloud platform provider supplies so that the service he provides is considered Infrastructure as a Service. To understand Infrastructure as a Service we need to look at the essential characteristics found in Infrastructure as a Service.

Infrastructure as a Service – Dynamic Scaling

Dynamic scaling enables the organisation to increase and decrease their hardware and processing requirement as and when required. Dynamic scaling may be driven by application requirements or seasonal computing demand of the organisation.

This is an important characteristic of Information as a Service; if customers need more resources they can get them immediately.

Infrastructure as a Service

Service Levels

Infrastructure as a Service is offered in different flavours to organisations. Organisations may rent capacity based on an on-demand model with no contract. In other situations, the organisation signs a contract for a specific amount of storage and processing capacity.

A typical Information as a Service contract has a level of service guarantee included. The entry level may guarantee basic services while at the top-end a mirrored service with almost no change-of-service interruptions is the norm.

Rental Model

When organisations use computing resources from a cloud provider, the servers, storage, and all required IT infrastructure components are rented, based on the quantity of resources used and how long they’re in use.

In the private Information as a Service model, renting takes on a different focus. Organisations typically allocate usage fees to individual departments based on their weekly, monthly and yearly usage. With this flexibility, organisations can charge more of the budget to heavy users.

Licensing

Infrastructure as a Service providers typically use a metering process to charge organisations based on the instance of computing consumed. An instance is defined as the CPU power and the memory and storage space consumed in an hour. When an instance is initiated, hourly charges begin to accumulate until the instance is terminated.

In addition to the basic per-instance charge, the cloud provider may include the following charges:

• Storage: A per-gigabyte (GB) charge for the persistent storage of data.
• Data transfer: A per-GB charge for data transfers. The fee may drop if you move large amounts of data during the billing month. Some providers offer free inbound data transfers or free transfers between separate instances on the same provider.
• Optional services: Charges for services such as reserved IP addresses, virtual private network (VPN), advanced monitoring capabilities, or support services.

 Conclusion

Infrastructure as a Service is a provision model organisations use to outsource hardware required to perform their business. Many organizations select a hybrid approach — using private services in combination with public cloud services. This approach is attractive because an organisation can leverage its private cloud resources but use trusted public cloud services to manage peak loads.

Selling Enterprise Software

One of the big differences between selling  software to the small business and selling enterprise software  is the price of the solution.

 

Software Sales Challenges:

Selling enterprise software has its own set of challenges that became even more complex with the downturn of the economy. Gone are the days where IT departments had huge budgets to spend. Stringent budgetary constraints are in place, the approval process includes more checks and balances and is closely monitored.

 

How To Succeed:

To be successful in this new environment the enterprise sales representative possess many skills, and one of the most important is the ability to listen to his customer and understand what is actually being said both verbally and non-verbally.  It is important to take note of the tone of voice used by your customer at all times.  This will often reveal more about his desire to place an order than he will reveal.

Listening to the tone of voice of your customer you will gain an insight into the way he is interacting with you and whether wants to do business with you or if he is actually just using you to get a 2^nd quotation for a solution.

 

Common Questions:

Questions that you must answer while listening to your customer are:

• Is he passionate about his subject?
• Does he sound  disinterested in your questions?
• Did he discuss his business needs with you before requesting a price for the enterprise solution?
• Do the features he requires appear to fit the specifications of a solution offered by your main competitor? If so, what are you going to do about it?

Selling enterprise software is a challenge. How you adapt to the changing environment will determine your success.