When creating and executing a plan during cloud negotiations, it is crucial that businesses understand what their cloud vendor will agree to. However, getting the cloud vendor to negotiate with complete transparency can give businesses a lot of power and leverage, especially if they know what the vendors are going to say no to and what they can say yes to in the end.
When an enterprise properly plans for successful cloud negotiations, they must ensure that all of the terms they need from their cloud vendors are pushed through and make their way into the contract, in addition to ensuring they have the proper pricing. There is a list of requests that the client can be confident their cloud vendor can say “yes” to, based on expertise, best practises, and knowledge of what each cloud vendor is willing and able to achieve.
Understanding what each cloud vendor would say “no” to is a counter-perspective that is also crucial to focus on when preparing for the cloud negotiation. While negotiating, skilfully guiding the cloud vendor to say no to the following three requests can often help a company accomplish other critical terms and conditions in the deal.
Credits or Refunds for no use or underutilization
The cloud vendor will refuse to offer a refund or credit for items or product features that were not used during the length of the subscription, citing revenue recognition concerns as a reason. When this happens, companies gain power and improve their chances of obtaining swap rights in their cloud agreement.
Cloud customers should request for a commitment to be able to swap products and unused volume for other products or volume of equal value. They are not requesting a reduction in spending; rather, they are requesting for products that their organization can employ, guaranteeing that they are getting the best value for their money. After being forced to say no to a refund request and effectively a acknowledging that they have been paid for services that their customers have not used, the cloud vendor is in a difficult position to refuse to allow businesses to swap rights.
A volume discount framework
Once a certain volume threshold is reached, the cloud vendor will refuse to allow all unit pricing to be adjusted to a lower per unit price. They can only reset the per unit price for units that fall within and over the volume threshold.
When the cloud provider refuses to apply the discounted pricing to all of the volume, the chance to fix the go-forward baseline price for all units/users at the lower per unit price arises during the renewal negotiation. Businesses can remind the cloud vendor that they did not cut the per unit pricing for all the committed volume even though this greater level of use also resulted in increased committed payments back to the cloud vendor.
The cloud vendor will most certainly not allow businesses to terminate their subscription during the term.
Companies can remind cloud vendors that they want to create a partnership with them rather than a transactional relationship by having the cloud provider say no to the ability to terminate for convenience. A partnership necessitates flexibility on both sides, and it’s difficult to regard it as a true partnership when one party is forcing the other to stay in the partnership even if things aren’t going as expected.
Furthermore, if the cloud provider is sure that the products will achieve the desired results and value, there should be no reason for enterprises to consider ending the relationship. This is especially true when everyone understands that there is no ball to take home with them and that selecting and implementing a new solution presents considerable hurdles