Don’t Fall for the FUD!

Now that money is trickling back into technology budgets, many vendors are going on the offensive again. As a result, you need to be ready for the emergence of the vendor FUD (Fear, Uncertainty, Doubt) machine that is sure to resurface. We’ve already tackled how you calculate the true TCO/TVM of each product under consideration, thereby helping you to dispel the first piece of FUD you’re sure to hear, which will be along the lines of “we’re the cheapest and have the highest ROI, while our competitor is the most expensive and your ROI will be negative if you go with them“, but once you get past this, any vendor with a decently aggressive sales force will have more FUD loaded up and ready to fire (if they feel they are at a disadvantage). Here are three common pieces of FUD that, to be blunt, don’t mean nothing.

  • Our competitor is being sued (by us).

    So? Many of the lawsuits in this space are nothing more than desperate attempts by the bigger vendors, who haven’t innovated in years, to literally sue their smaller competitors out of commission with baseless lawsuits that plaintiff hopes will be too costly for the defendant to defend (as the plaintiff will attempt to draw the discovery phase out for years before the case gets inevitably thrown out).

  • Our competitor can’t do Fliggle-Flaggle-Floogle.

    Many vendors with less competitive or innovative offerings will focus on one or two impressive sounding (but essentially worthless) features that their competitors don’t have and turn up the tech talk dial to eleven in hopes of confusing you into buying their product. Don’t fall for the tech talk. It’s not about the technology, but about the value it can deliver to your organization. And sometimes its best not to buy the technology at all, but to contract with a consultancy or BPO who can maximize its potential (especially if the value curve flattens out quickly, as it does with tactical spend analysis [reference]).

  • You have to go all-in.

    Many providers will insist that you have to buy the whole suite, complete with licenses for every user in the organization, or you won’t realize the full value available to you. So what? It’s not about how many pennies you can squeeze out of the technology, but about how many pennies you can push down to the bottom line. Let’s say you can buy a solution for Procurement only from a competitor for 50K and that you expect you would drive 500K in savings from the purchase. Now let’s say you can buy their solution for the whole organization for 250K and drive 1.250M in savings. Which is better? The Procurement solution. It has a 10X ROI, compared to the 5X ROI the full organizational solution offers. Furthermore, when you look carefully, you see that the extra 200K only saves you an additional 750K, which is an ROI of only 3.75X. Yes, you want to save that additional 750K, but if you keep looking, you might find another 50K point solution from another vendor that will save you 500K of that 750K, which gives you another 10X ROI (and makes the organizational solution a bad buy since you’d now be spending another 150K to save 250K, which gives you an additional ROI of only 1.67X …. which means that one stumble on the organizational solution path and you would have been better off with the (much) less expensive and (much) lower risk point solutions).

And don’t forget, if the management/ownership team hasn’t changed much, what Tweety Bird has been saying for years still holds true. Don’t get fooled. Once a bad old putty cat, always a bad old putty cat

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