Price comparison vs. one partner – which suits your business?

Published on: November 2, 2018

Price Comparison vs. One Partner
I was recently discussing one of our solutions with an end-user when they asked me to recommend a reseller. This end user did not yet own Dynamics GP and was unfamiliar with the Dynamics channel. When I gave them the name of one reseller in their area who was very experienced with our solutions, they immediately asked me for another two resellers to compare prices against.

So the question is this: Are new end users better served through “price comparing” partners or working with one partner in greater depth?

As an ISV, we run up against this question quite frequently. And as in many of my articles, the answer is entirely dependent on the end users specific requirements.

Typically, the argument for price comparisons is to keep all vendors “honest” and to attain a quote with the lowest possible price for the most value. But is there more to choosing a reseller than just the price of the software?

As many of us know through our experiences in software, of course there is much more to it than just price; particularly if the software is more complex to implement. Even though a client may save a thousand dollars on the actual software being sold, the cost of a poor implementation can easily eat away any savings in software dollars. There can be many sunk costs from a poor implementation: the cost of the actual implementation (that has not produced results), internal labor to aid in the implementation, overtime costs, new equipment, training time, lost confidence in the new system, and the list goes on. What about the opportunity cost? What could we have done with all that time and money instead? The software price may be easy to compare as it is the same product from reseller to reseller but its implementation is what truly becomes paramount to the success of rolling out a new ERP system. This is where “apples-to-apples” comparisons are harder to evaluate.

So how does one ensure that they are getting the best value from a reseller from a software and implementation perspective? The age-old adage applies: we must do our homework and due diligence on each proposal. The more homework and depth spent usually increases the likelihood of a better outcome. Some of the items a prospective client should evaluate are:

  • What software or modules are we purchasing?
  • Does it solve the business issues we are trying to overcome?
  • Are there gaps in the solution?
  • Are these gaps significant?
  • If so, are we getting a solution that solves 90% of our issues or only 50% of our issues?

View the project holistically. That is, treat the software, implementation, and the results to be obtained, all as one deliverable. By separating them, for example: buying software from one reseller but doing the implementation through another, a client can dilute the responsibility of the overall business deliverable to be obtained. The net effect may be that the client ends up with resellers who say “it’s the other guys’ problem, not mine!”

Fixed bid versus Time and Materials bids. An entire, standalone article can be written on this topic, with both pros and cons. Uncertainty is always the “killer” here. Does the reseller have enough information to provide a meaningful fixed bid? When they don’t, a reseller will pad this number (fixed bid) with contingencies to protect themselves. So, fixed bids can be more costly depending on what they intend to provide in their statements of work. This leads us to the scope of the project.

Define the scope of your project carefully; this is a common pitfall in many software implementations. One reseller may quote a ballpark number that is much lower or higher than another reseller. The only way to evaluate this is to find out exactly what they intend to include as part of their deliverables, the work they see the client provides, and the overall deliverable to be achieved at the end of the project. Here is where “apples-to-apples” comparisons must be watched carefully if multiple software resellers are involved. Is the proposal that is 40 hours less good than one that is 40 hours higher? If the proposal(s) in front of a client is too high level and cannot illuminate what the differences are, then let the buyer beware.

Have I suggested one buying method over another? No, I have not. But whether you are dealing with one reseller or many, due diligence is critical to success. I can still hear my parents telling me, “Do your homework”. And guess what? They were right!

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