Software vendors bare teeth at sales time

Software vendors are still employing aggressive methods to lock in sales with end users, according to a new study by market analyst Ovum Ltd.

Ovum surveyed 125 organizations in North America and Europe, examining common sales techniques adopted by vendors. Every end user surveyed reported at least one issue with a vendor, and that forceful sales pitches left them spending more money than they wanted to, and sooner, Ovum says.

Many software companies say they have reformed questionable sales tactics, but the study found that vendors still employ them when under sales pressure, the study says. About a dozen large and small vendors were mentioned in the course of the survey, but Ovum did not name them in the report "since no vendor came out darker than the rest," says David Mitchell, software practice leader at Ovum.

Vendors primarily used two methods. In the "puppy dog" approach, vendors offer software for a trial period and then charge after the user has a relationship with the vendor. To guard against this method, Ovum cautioned organizations to define trial use periods and purchasing arrangements prior to using software.

Another method, nicknamed "gun metal in the mouth," occurs when an organization employs software in mission-critical areas for many years. An organization may be offered software at a substantial discount initially, but at renewal time, the vendor may threaten to remove the software unless the user commits to a more expensive contract, Mitchell says.

To avoid this situation, users should have a commercial alternative available for the function and be willing to call the vendor's bluff. Mitchell says Ovum recommends that if companies spend more than 10% to 15% of their IT operating expenditures on one vendor, they should have a sourced replacement plan ready in case negotiations go bad.

The IDG News Service is a Network World affiliate.