Vendors are hiking prices up to 30 percent and claiming 'it's inflation' Some technology vendors have hiked prices by up to 30 percent over the last year and claimed the rises are due to inflation, despite inflation running at a far, far lower rate. So says analyst firm Gartner, in a document titled "How Should Executive Leaders Strategize Vendor Negotiations to Combat Inflation?" The document …
My lord: Gartner tell buyers to wait until the end of a quarter or financial year, dangle multi-year deals or mention competitive tenders as ways to get prices down?
Here's Ball Boy's hot tip for companies needing to shave a little off their costs: stop subscribing to Gartner's 'advice' unless you are in need to hear that the Pope is, indeed, Catholic. Thank you. That'll be a £3,000 consulting and strategy fee, please.
What we really need is the government to introduce anti-gouging legislation.
It's probably something the NAO and BoE could do because unjustifiable price rises are obviously inflationary themselves.
Then back it up with penalties, ie something like 10x penalties based on UK revenues that have been inflated just to boost profits. For an added bonus, also hold executives directly responsible and liable because claiming 'inflation' when costs haven't actually risen is arguably fraudulent, so pierces the veil of limited liability.
Challenge would be avoiding the worst aspects of price caps, which can often go wrong. Or just get called 'socialism' by ardent capitalists. Applying it to the energy sector would be a good start to reduce the current windfall profits.
>What we really need is the government to introduce anti-gouging legislation.
Aha! A "Wages and Prices Freeze". Most of our readers will be too young to remember this (its from the 1970s) but the result was the New Dawn of Monetarism and its Bright Promise of the Future Born of Enterprise. All you had to do was flog off anything the government owned, take off all restrictions on corporations (and reduce their taxation to vanishingly small levels, of course) and a future of peace and prosperity would be assured.
The suckers fell for it. Actually, all that happened is that after a troughfest on stored value and a bonfire of regulations (that's their term, not mine) you end up with a bunch of unregulated monopolies (or near monopolies -- they used to be called cartels) and an 'optimized pricing strategy' that could loosely be called 'screw the customer'. Its not unique to the UK, either.
"I can hear the bells ringing out loud from the rooftops throughout the U.K. to celebrate getting 'advice' from the "hallowed ones" that no one else would ever have thought of."
Maybe they can advise us on the best negotiating position to take on our prospective new PM and what to do about the NI "border issue" while they're in the mood for dishing out useful advice?
...that has always made me uncomfortable with the very idea of SaaS. Once they have your data and are deeply.embedded enough in your business that changing provider becomes extremely problematic what do you do if they decide to just jack up the price?
Oh, sorry, yeah, the £14,000 a year you were paying for that business critical application? It's £18,000 now, and if you want to use any "advanced features" like SAML for user authentication it'll be another £20 per user per month on top of that. Sorry, economic conditions, inflation, all that sort of thing. Oh, and good luck migrating all your existing data out to another provider because we don't provide that service at your pricing tier any more, only a bare legal minimum "dump the lot as a big flat file" that none of our competitors can easily read.
"what do you do if they decide to just jack up the price?"
Which is exactly what a lot of UK universities are now belatedly discovering about the "Free" services offered by Microsoft and Google...
Virtually none of them formulated policies for migrating elsewhere or backing out in such an event
"Oven ready deals" aplenty
That's what happened to me. I have been using an "unlimited" service package paying around £200 a month. After a year they sent me an email saying that their package isn't actually "unlimited" and from next month they'll charge me ~£12,000 a month based on my usage or I can terminate the service.
I've been using multiple providers, so it was easy to say good bye to them, but if I didn't then I would have been in a pickle.
This is pretty basic contract management stuff: Have a list of all your contracts and expiration dates, don't wait until the last minute to renew or update, engage with your supplier regally talking to discuss what your ongoing needs are.
I work in sales and clients who don't/won't engage until they need something get little attention and little sympathy.
Note: be ready to give free stuff to help negotiate a better price: be a reference for your supplier, agree to a case study, present at their quarterly internal call.
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Inflation is a hidden tax. It is very real, and it is going strong right now. Did you think those "Stimmy checks" were just free money two years ago? No, they were borrowing from the future and using inflation to pay the bill.
Gartner missed the mark. Increases for inflation are a given. Only vendors with weak marketing departments will use that as a published excuse though.
This is supply shock inflation. If vendors are selling something that is in short supply due to chip shortages, shipping difficulties, covid shutdowns of the Chinese factories etc. etc. they can raise their prices because supply is limited.
It isn't worth worrying about this, because it is only a temporary condition. Once the supply chain untangles (which may not be soon but will happen eventually) these inflated prices will slowly work themselves out of the system.
We see the same thing with oil prices all the time - something happens that limits supply for a time causing prices to spike, the oil companies are making bank, everyone complains and talks about price gouging. Then whatever limited supply gets fixed, someone else makes up the shortfall, etc. and slowly (much more slowly than the rise) the basic laws of supply and demand force that price premium out of the market.
They will not be able to charge these 30% premiums in the long term, so if you can afford to wait, do. Not only will you pay less later you will hasten the day when that happens.
if you've got a 1/2 competent IT team who can slap purchasing and finance down, just hand in your notice with the supplier and get a competitor in.
There isn't a single piece of software out there that can't be replaced and if you're dumb enough to use Oracle, you deserve everything you get
How to let everyone know you don't have experience with changing suppliers for critical systems. It is not cheap nor easy to migrate systems.
Why do you think so many such changes go wrong and end up being contested in courts with customer and vendor blaming each other?
Perhaps some of it is just in case prices go higher. Some of it is an excuse, some of it is jumping on the bandwagon.
I'd imagine everyone is affected differently at the moment.
Is inflation really 10%? Personally, I have very few works costs - but those that I do have include electricity, fuel, and phone bills. My work costs have gone up nearly 30% in a year. And lots more personal costs too, due to interest rates and food costs etc, so I've got to build that in too.
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