Pricing and contracting with your cloud vendor: Tips and tricks

RIO DE JANEIRO

As a new year starts, many of you will be busy working on an RFP for a new HR or ERP system. One aspect that draws little attention from the myriad  reports and posts on system evaluation deals with pricing, contracts and other T&Cs (terms and conditions). This means that because of the inherent knowledge imbalance between vendor and customer, the latter is always the loser as they tend to learn after the fact (the reason for this knowledge imbalance being that vendors respond to RFPs all year long, whereas customers  engage in new RFPs only once in a while, and their procurement departments cannot be expert in all business domains and vendors -especially for smaller-sized companies.)

So, as a New Year's gift to my readers, here are some advice and information which I am sure you will find useful as you negotiate the perilous shoals  of cloud contracting.

No public price list
Unfortunately for user organizations, cloud vendors are playing this game with their cards close to their chest. It is almost impossible for a new customer to find out what is the "true" price of a specific module - "true" meaning how much a comparable company has paid for the honor of becoming a user. Don't expect any customer to share that information freely at Workday Rising, SuccessConnect, Oracle World or Cornerstone Convergence. And as for the vendor, mum's the word. In other words, you're pretty much on your own here.

The basics

(This post focuses on pricing issues related to software vendors. Of course, an HRIS project often involves another  vendor, a system integrator, which brings pricing and contracting issues of its own. I will discuss those in a later post)