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Software Firms Modify Business Models to Lure SMBs, Says META Group

  • 22 January, 2004 16:57

<p>Software Firms Modify Business Models to Lure SMBs, Says META Group
Small and Medium-Size Businesses Will Have the Opportunity to Hone Vendor Negotiation Skills</p>
<p>SYDNEY, Australia, (January 22, 2004) – META Group, Inc (Nasdaq: METG) anticipates a continued effort by a number of software vendors in the enterprise resource planning (ERP), supply chain, and infrastructure markets to increase their efforts to attract small and medium business (SMB) clients by modifying their technology, product lines, selling techniques, and pricing models throughout 2004/05.
“Software vendors are continuing to revamp the products they offer SMBs — along with their marketing, sales, and product development strategies — to better meet the buying styles of SMBs,” said Carl Lehmann, vice president with META Group’s Technology Research Services. “As vendor business models and selling strategies change, SMB buyers will have to improve their negotiating skills.”</p>
<p>According to META Group, negotiating skills must adapt to include understanding of flaws and thereby get the best deals from vendors that offer complete or partial software, services, and maintenance proposals. Many SMB buyers focus on software functionality and fail to adequately address the implementation services or maintenance charges associated with an IT project.
“For example, vendors often try to base maintenance contract prices on the ‘list price’ of software licenses (usually 20%-22%) when dealing with SMB buyers,” said Lehmann. “It is important for SMB buyers to leverage the interest in their market and negotiate maintenance agreements based on ‘as sold’ prices, or contract deliverables in return for their business.”
With newly found leverage, SMBs could negotiate down to or below the 18% average, or they could add maintenance contract deliverables such as support (e.g., troubleshooting, help desk, patch administration) and future releases to their agreements.</p>
<p>About META Group
META Group is a leading provider of information technology research, advisory services, and strategic consulting. Delivering objective and actionable guidance, META Group’s experienced analysts and consultants are trusted advisors to IT and business executives around the world. Our unique collaborative models and dedicated customer service help clients be more efficient, effective, and timely in their use of IT to achieve their business goals. Visit for more details on our high-value approach.</p>

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