Most CIOs at some point in their career have entered into an agreement for a product or service only to be so disappointed that they’ve wanted to cancel the contract.
I can remember wanting to terminate a marketing analytics agreement that packaged server and software, which we all thought would be great for our marketing research group. It wasn’t — and we had to look elsewhere.
Unfortunately, moving away from this system and trying to deal with its vendor wasn’t as easy as returning a pair of oversized shoes. The vendor didn’t want to renegotiate. Fortunately, I had an “out” in the contract. Since there was no specified termination date or clause stated, we simply cancelled by stopping payments. We had purchased a dedicated server to run the software that we couldn’t return, so repurposed the server so it could run analytics reports for the finance department. I still had to explain the situation to my CEO, who wanted to know how we missed the mark with our initial choice — but the loss was much easier to take since we were able to exit the contract and repurpose the hardware.
Despite our relatively good luck, this was a clearcut case of buyer’s remorse I’ve often thought about since.
The question is: What steps can CIOs take to best mitigate a situation when an IT purchase doesn’t pan out?
Study the contract for exit ramps — and move quickly
If there are no clear termination conditions or clauses in the contract, move to cancel it. But before you do so, review the matter with an attorney or the company legal department.
As soon as you discover the technology isn’t going to work for your organization, take action immediately by letting the vendor know the solution won’t work — and that you want to cancel the contract. The more aggressive you are in discovering the incompatibility and reporting it to the vendor, the better the chance that you will be able to return the product or service, or at least recoup a portion of your investment.
This sounds simple — but many companies allow software to become shelfware over a period of years, and then try to approach the vendor, saying they can’t use the product and want out of the contract. Many companies also don’t keep track of their contracts, or they aren’t even aware that they’re continuing to pay for assets they don’t use. If a company finds itself in one of these situations, vendors won’t be too anxious to help.
Seek middle ground to renegotiate
In almost every case, vendors will have termination clauses and conditions in their contracts. Some (cloud vendors are a good example) require only 30 days written notice to terminate a contract — but in other cases, the contract might run for three or even five years.
That said, it’s not to a vendor’s advantage to have unhappy customers.
The first step a vendor is likely to take to help mitigate the situation is to offer onsite help with implementation or the training of IT and users. The goal is to get everyone comfortable and confident with the product or service so they can move forward, and sometimes this works. There is nothing to lose here, and everything to gain — so it’s often smart to take up the offer.
There is also another advantage when vendors come on site to try to make their solutions work: If the product or service is truly not a fit for the organization, a vendor that is onsite to make the solution work will be able to see this firsthand. At this point, a renegotiation can take several forms, including the following two most prominent ones:
- The vendor might offer you an “out” on the contract, with the proviso that you pay a penalty cancellation fee; or
- There might be other products or services that the vendor offers that would be useful, creating a possible “trade in” scenario in which the original fee can be applied to purchase the new asset. This can be a win-win for the vendor and your company; the vendor doesn’t lose a sale or a client’s good will, and you get a solution that works without incurring further loss.
Sell, repurpose, donate
There are cases where companies have been able to sell or trade unwanted assets to other companies or to third-party vendors. There is usually some monetary loss from the first investment, but the seller can recover a substantial amount of the original price paid. This works well for older hardware (e.g. disk drives, processors) that third-party equipment suppliers are eager to buy, re-certify, and sell.
Another route, as we took with the marketing system we purchased and regretted, is to seek ways to repurpose the asset. Hardware offers the most likely chance for a repurpose win. In our case, with the server redeployed for financial reporting, only the software ended up as a loss.
Unwanted or aging assets can also be donated to nonprofit groups, and you can use the donation as a charitable write-off. This isn’t a great way to “monetize” a failed asset, but it is a way to make something of your buyer’s remorse, including helping a charity of your choosing to improve its technology stack.
Upfront work pays off
Of course, the best way to deal with buyer’s remorse is to diligently avoid having to face it in the first place.
This can be done by piloting or trialing a solution before you sign up for it; or by negotiating a short-term contract with the vendor before you enter into longer terms.
The goal is flexibility in contract negotiation and technology management in today’s rapidly changing business and tech environment — and it’s well worth the time of reading the fine print of every contract you contemplate before you sign up.
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Read More from This Article: Buyer’s remorse: What to do when an IT purchase isn’t a great fit
Source: News