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IBM contract consulting

IBM is one of the most important suppliers and partners in the IT sector for banks, insurance companies and other companies in the financial services industry. On both the software and hardware sides, the annual costs of maintenance and new purchases often account for a significant proportion of the budget. Its role as a mainframe monopolist and its generally complex licensing, pricing and billing models often create difficult and opaque situations for companies. Over the past 15 years, Intero Consulting has acquired unique expertise in a variety of contract negotiations with IBM and also supports many well-known corporations, especially in the following areas:

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A common practice in software or hardware purchases from IBM is to enter into bundling contracts, known as ESSO (Enterprise Software and Services Option) or Open Infrastructure Offering (OIO) contracts, in which all purchased products are offered at a single bottom-line price. Whilst these may promise major discounts, they provide no transparency concerning the costs of individual products. Meaning that it is possible neither to compare the development of conditions nor to make a valid statement concerning individual products.

Thanks to its years of expertise and internal and external benchmarking standards, Intero Consulting can bring transparency to these conditions:

  • The appropriate conditions with regard to bulk buying, contract history and workload development are presented to the customer transparently and comprehensibly.
  • Based on known comparative values and proven Intero valuation tools, the expected, reasonable price for the contract is determined
  • When it comes to preparing new contracts, the customer is helped to determine exactly how many licenses and extensions to maintenance agreements are required so that it only orders what it needs.

IBM's software products are often characterized by complex licensing models that are further diversified by a wide variety of billing methods. This situation entails a whole array of risks for customers. On the one hand, there is a risk that the complexity of the licensing models may inadvertently lead to licensing mistakes that can result in high contractual penalties when an audit is conducted. On the other, the different billing models mean that a lot of expertise is needed if a company is to choose the most suitable; mistakes here can generate high additional costs. Moreover, IBM regularly introduces other models that, while admittedly offering opportunities for cost optimization, can also mutate into cost traps. Thanks to its years of project experience and complex internal tools, Intero Consulting has found solutions to offer customers the best possible support in this area:

  • Support in an internal license audit can eliminate audit risks in advance and ensure proper licensing.
  • In cooperation with the specialist department and the mainframe managers, the most suitable billing model is selected for the customer. The change to a new model can also be reliably analyzed in terms of the opportunities and risks it presents.
  • Effective management can be introduced to optimize the resulting workload with the effect of reducing software costs without any changes

Since IBM can often act as a monopolist in negotiations, the balance of power in such situations is usually very asynchronous. This is because many of the products that can be the object of such negotiations can be business-critical, and their procurement is not a matter of choice. However, this doesn’t mean that effective negotiating strategies can’t shape the negotiations in the customer's favor. Thanks to its many years of experience, Intero Consulting can draw on successful concepts that result in significant negotiation successes:

  • Intero supports its customers in the effective development of threat potentials and possible alternative scenarios
  • The development of a long-term, forward-looking negotiating strategy means that pre-defined objectives can be effectively coordinated and achieved

Your contact on the subject

Wolfgang Bruhn

Partner

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Our other competences

Procurement

Achieve optimal results, in any negotiation position

Cost Management

Understand and optimise costs

Transformation

Successful communication and strategic change management

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