Ugly enterprise software sales tactics

Ugly enterprise software sales tactics

Summary: Forrester analyst, Ray Wang, describes three tactics enterprise software vendors sometimes employ to pull more cash from customer pockets:Forcing...

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Forrester analyst, Ray Wang, describes three tactics enterprise software vendors sometimes employ to pull more cash from customer pockets:

  • Forcing clients to spend more to keep a low rate for maintenance
  • Selling additional products that have no future road map because of post acquisition road maps
  • Suggesting additional consulting services that require additional product purchases

THE PROJECT FAILURES ANALYSIS

The first point doesn't seem particularly heinous to me, although I suspect Ray would disagree. After all, every business uses volume discounts, and why should enterprise software companies be different? Some folks, such as ZDNet colleague Dennis Howlett, have raised fervor over what he calls the "empty calories" of expensive software maintenance, but I view that as a separate, although certainly related, issue. In this case, I'm strictly referring to the volume discount issue.

The second tactic, selling dead-end products, is nasty indeed. I believe selling useless licenses to locked-in customers crosses the line of unethical behavior. Sales people who perpetuate this crap should lose their job.

Finally, on up-selling consulting services, again I don't think this rises to the level of horrible crime that Ray suggests. Yes, the approach is hardball, but again, every business tries to up-sell. To be clear, I'm not condoning strong-arm tactics, however, this nonsense is not in the same league other sleazy enterprise software sales tricks.

In fairness, it's also important to recognize Ray's bias. Although he's one of the most knowledgeable, diligent enterprise analysts out there, Ray's role is to protect his clients, and he does benefit from negative press about vendors.

That said, technology vendors sometimes make themselves easy targets and Ray's points (and the stories in his post) are entirely plausible.

Topics: Enterprise Software, Software

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5 comments
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  • Blame The CEOs, Not Just The Salespeople

    The whole discussion, here and elsewhere, about enterprise software sales tactics that range from unpleasant to downright slimy, points the finger primarily at salesforces rather than at the CEOs of these vendors. When CEOs condone some of the most offensive if not illegal tactics -- and some prominent ones do -- then their salesforce executes. One of the real advantages of SaaS (and of hosted/subscribed) is that vendors have to renew those clients every few years and therefore may be more inclined not to p@#s them off completely. Perpetual license has come to mean "they've got me by the throat in perpetuity," and that is a recipe for bad behavior initially and perpetually. One possible indicator of how a specific enterprise software's sales team and tactics are viewed will be what % of PeopleSoft customers leap at the opportunity to reimplement for Fusion versus leap to another option when Fusion, the path to Fusion, and the future (or lack thereof) of innovation on the PeopleSoft platform becomes a lot more clear.
    naomibloom1
    • Up and down the chain

      No doubt what you say is true. At the same time, when someone is shooting at you, it's best to respond directly to that person. Thanks for commenting.
      mkrigsman
    • Rosy View of SaaS?

      Agreed that CEOs and being slave to shareholder expectation sets the mindset to do whatever it takes to increase revenue.

      But SaaS doesn't provide you protection from price-increase extortion tactics. As with the stories in Ray's article, the customer can always go elsewhere, but with great disruption. In fact, the SaaS customer is in tough position because the SaaS supplier can pull the plug on application access if you don't pony up the money (similar to the story about not getting the license keys). The SaaS customer might not be in a position to "port" the data over to another system because they don't have access to the data once they've been "shut off".

      SaaS just lets me hide from the aggregate cost of ownership, because the cost occurs per the subscription period as opposed to one big, up-front cost that now has to be amortized into the future with host-your-own or traditional ERP apps.
      elizab
  • It helps to stick in monetary check points

    Discount or require money if goals have not been meet.

    Has always worked for us. Things may get nasty.. but it does hold companies accountable( and by the balls ) if things go wrong.
    Been_Done_Before
  • Are We Just Kidding Ourselves?...

    Silly us, we think suppliers and vendors exist to help us. [i]Au Contraire.[/i] They exist to make money to satisfy shareholders and justify executive and top-performer compensation (period). We're lucky if it turns out that our (the customer's) interests intersect with the supplier's or vendor's.

    The people who feel they don't have to wring or force every penny from you work for companies whose shareholders give them that freedom.

    This might mean that the roll-your-own folks [i]might[/i] look like good guys. At least control is within the company, and you're just fighting with yourself as opposed to fighting the vendor [i]and[/i] yourself.
    elizab