2010 should bring a flurry of new acquisitions with many established companies looking to expand product lines and increase growth within the organization.
Of these companies looking to expand through acquisition, raising capital expense to fund the newly acquired business unit will be a challenging experience in ramping-up operations with manufacturing and warehousing distribution.
Many companies will be looking to outside warehousing and distribution ( 3PL’s ) assistance in order to compensate the need to either add-on to a existing building or to reorganize a current floor plan.
It makes perfect sense when acquiring a new business unit to have the flexibility of outside warehousing and distribution. With all the challenges the current organization has with product line simplification, product integrity, customer retention and merging of operations and customer service the 3PL can add much value to the company but lending it’s expertise in distribution challenges.
Having the flexibility and an open working communication with the outside warehouse and distribution facility allows valuable time to evaluate and streamline the newly acquired business unit or product line.
The organization can now grow and nurture the new product line or reduce the number of SKU and not have it interfere with the current core business.
Effectiveness, is key to competing in today’s business environment. Logistics is a process, a supply pipeline which connects you with your vendor/supplier and your customer.
Whether you compete domestically or globally competitors, vendors, suppliers and customers are worldwide.
The significant cost of logistic/distribution effects the entire supply chain. Logistics importance integrates and develops long-lasting alliance is between the vendors/suppliers and customers. Logistics contributes to a competitive advantage, viewed as a comprehensive process objective, making your product more competitive in the global marketplace.
Ask yourself how does your business unit measure up? Is your logistic/distribution network competitive? Does your current logistics/distribution network meet the requirements of your customer? Most importantly is it currently effective?
To summarize, a formal logistic program will create a competitive advantage for your business unit.
Service and cost benefits can distinguish you from your competitors.
A formal logistic network program will enhance your status as a supplier domestically and more importantly in the global network.
To approve Spend Analysis projects, project Sponsors often need to justify to their management why they need to utilize Spend Analysis providers to do the project, as opposed to internal IT resources. Some companies may not have this problem in that they don’t have IT resources available, so it is obvious they need to use outside help. But sometimes there may be conflicts internally. The simple answer is that internal IT resources usually do not have the focused experience and knowledge regarding the unique data cleansing and classification needed for Spend Analysis.
Internal IT resources typically have…
Familiarity with the corporate data sets and applications
Familiarity with the Corporate IT environment
Familiarity with a Corporate Reporting tool
Internal IT resources likely do not have (and Spend analysis providers have in spades)…
Related to (1) above…. IT resources can easily provide data files, but Vendors are more experienced to integrate and reconcile organizational data to specific Spend fields needed to properly drive meaningful Spend Analysis. Significant relationships exist between Spend data, and vendors know what to look for. They also have structured tools to process the data effectively.
Related to (3) above – IT resources can help with getting cleansed and classified data back into the company reporting environment, if a company reporting tool exists. Companies can also utilize vendor “Smart” Reporting, which is tailored for detailed Spend visibility and opportunity assessment.
Experience with cleansing data – for example, we have over 50,000 cleansing rules built over 12 years across over 200 projects and customers in many industries, already defined.
Experience with Supplier Grouping.
Experience optimizing Supplier data enrichment from vendors such as CVM Solutions or D&B.
Experience with data classification, handling numerous taxonomies for analysis, and grouping Spend data into meaningful sourcing categories. For example, we have a master library of over 100,000 master rules for items and categories we have seen across all those projects mentioned above.
Experience with structured data “refresh” and handling the nuances of combining, re-cleansing, re-grouping, and reclassifying data with rigor to all the taxonomies in use.
Experience in foreign languages and associated data processing and translation.
Experience in mining and reporting in-depth level s of “savings opportunity assessment and identification” versus basic pivot tables and cubes.
Internal IT resources usually do not have authority across divisions and countries to get data, so a vendor can help to make the integration and change happen.
Spend Analysis vendors provide focused tools and resources to implement advanced Spend Analysis within your organization, and can be utilized effectively in place of internal IT resource. And the cost is usually less than 1 or 2 full time equivalent headcount, which is a bargain as you discover savings opportunities.
In my April post entitled “Take A Long Term View”, I described a client facing a sourcing dilemma. They were purchasing materials from a distributor who had installed “free” equipment in exchange for a commitment to buy the related supplies. They had previously solicited bids every two years and believed their “supplier partner” was competitive. They couldn’t imagine a way to save money given the high switching costs, so they were unwilling to diligently source this requirement.
This sole source situation raised a number of red flags so we continued our examination. We realized that prices for a third of the buy should track a feedstock index. Using this index, we demonstrated to the client that they had been paying a 10%-15% premium for these materials, versus what the index would have predicted, over the 2 year life of the contract! This finally convinced them to take action!
With the contract expiration and the holidays quickly approaching we needed to take quick but diligent action. We engaged the client by taking a tour of their facility. We interviewed them to fully understand their CTQs (Critical to Quality requirements). We requested detailed material specifications, as the existing specs were often the incumbent’s unusable short-hand descriptions.
Before reaching out to potential bidders, we obtained the client’s agreement on several important points:
They would move business if best value was available from a non-incumbent supplier,
They would consider alternatives to the “free” equipment and related supplies if the alternative was comparable and the switching costs were covered, and
They would allow a multi-source award if the savings warranted.
An important first step was a pre-bid meeting with the incumbent supplier and prior unsuccessful bidders. We felt it was critical to signal a change in the sourcing process. Prior bidders responded favorably to this. They acknowledged that the routine RFQs were not taken very seriously. They perceived the specs as biased and/or incomplete, and they knew the incumbent always won. Therefore, they had not bid aggressively in the past.
After the pre-bid meetings, we used a two step sourcing process. First we issued an electronic RFI using Iasta’s SmartSource solution. The purpose was to determine potential suppliers’ capabilities, to gather information on various alternatives, and to collect feasibility level pricing. We cast a wide net to over 20 potential suppliers, and through this process eliminated all but six. We then issued an electronic RFQ with final lots and detailed, accurate item descriptions. Responses allowed us to evaluate bidders against non-price criteria and to determine total best value.
Interestingly, the incumbent “partner” dropped their pricing by almost 20%! We had a 20% savings “in the bag” with no change. We seriously considered an alternative to the “free” equipment which offered a huge additional savings. However, upon investigation we determined the solution was not really comparable and we also had concerns about the service level of this bidder. After abandoning this alternative, we were still able to award over half the business to a non-incumbent supplier who could use the equipment that was already in place. (It turned out that the equipment was owned by the manufacturer, not the distributor!)
At the end of the day, this sourcing initiative delivered a 24% savings with future price movement for many items tied to an index. We included contract language that gives our client the ability to easily monitor suppliers’ performance. Contracts also provide for quarterly reviews including discussions about potential non-price cost savings. The new agreements clearly define the Scope of Services, and determine how cost increases for both indexed and non-indexed products are justified and approved. Additionally, the award entails minimal disruption since the existing equipment will be utilized. Of paramount importance, this award signals to all involved that the client will move business when warranted. We anticipate competitive proposals when these new contracts expire.
The lessons: In the absence of competition, our supplier “partners” become complacent and margins creep upwards. A perfunctory RFQ will likely not deliver best value. Our client did not have the staffing to conduct this rigorous sourcing project. By engaging consultants on a gain-share basis, our client was able to achieve a significant savings with no up-front cost or risk and a minimum of employee time.
While ITIL, the most widely accepted collection of best practices for IT Service Management (ITSM), has taken an important first step in evolving its guidance on outsourcing within the context of ITSM in its 2007 Version 3 release, it may have fallen short on providing the breadth of advice required in today’s market. Of particular note is the introduction of a few integral sourcing-related frameworks, including Service Provider Types in the Service Strategy core book and Service Delivery Strategies in the Service Design core book. Service Design has also consecrated a separate process to Supplier Management aimed at addressing service provider selection and relationship management activities.
While these additions can be seen as improvements over ITIL V2, the overall approach to engaging with suppliers in ITIL V3 could be construed as overly procurement-focused and lacking in sufficient guidance on the level of integration and governance required across the service delivery value network and service life cycle. Also unclear is the extent of the inter-mediation required of the client- retained IT organization to effectively integrate outsourced IT services and translate them into value for its business customer.
To help navigate the new sourcing related ITIL V3 guidance and bridge your ITSM and outsourcing strategies, consider these 5 tips:
1. Ensure service management integration is appropriately resourced in the client-retained IT organization. While Supplier Management can serve as the point of contact for relationships with external service providers, these resources typically do not have the skills or capabilities to integrate service management processes across organizations in an outsourced model. When service management remains a client-retained function, we recommend giving ITIL service managers the responsibility to integrate outsourced IT services to ensure effective end-to-end service delivery, separating this from the Supplier Management responsibilities in the organization.
2. Take a pragmatic approach to integrating ITSM processes and tools. When entering into outsourcing agreements, be sure to define the integration points, handshakes and required inputs and outputs across all ITIL processes and functions — particularly Service Desk, Incident Management, Problem Management and Change Management — between organizations in the service delivery model. Bear in mind that external service providers will have their own processes and tools, which will need to align with those of the client-retained IT organization. Do not over-engineer this integration but do consider moving to the service provider’s methodologies if they are more sophisticated. Note that this exercise becomes increasingly complex the more service providers in the service delivery model (see tip number one). At a minimum, make sure all parties are clear on who is ‘leading’ and who is ‘following’ and make sure these roles are documented in the various outsourcing agreements.
3. Implement a business-focused Service Catalog. Define your Service Catalog first in terms of the services delivered to the business customer (Business Service Catalog) and then work backwards to define the contributing IT component-based view (Technical Service Catalog). This will help ensure that the right resources and capabilities to deliver to the business service requirements are identified and will clarify the optimal sourcing mix for the service. Do not use the external service provider’s Technical Service Catalog as your Business Service Catalog.
4. Negotiate a Service Level Agreement with end-to-end service levels. Do not begin service level discussions with suppliers without having first implemented a formal Service Level Agreement (SLA) with your business customer. Formalize end-to-end service levels in a business-focused SLA and define the IT component service level targets in Underpinning Contracts with external service providers and Operating Level Agreements with internal service providers. Always ensure that the combination of these targets will meet the service levels agreed to in the SLA. Lastly, remember that an Underpinning Contract is never a surrogate for an SLA with your business customer.
5. Look beyond ITIL for IT governance. Against the backdrop of corporate malfeasance and recent legislation aimed at preventing it, corporate governance — of which IT governance is a subset — has taken on a renewed focus in business. While ITIL V3 does broach the subject of IT governance, particularly in IT Service Continuity Management and Information Security Management, Supplier Management provides only limited guidance on IT governance related to sourcing. For this, a number of other frameworks can be consulted. Of particular note is COBIT (Control Objectives for Information Technology), which is prescriptive on what to monitor and control and serves as a compliment to ITIL, which advises on how to implement monitoring and control as process activities.
The devastating events in Haiti last week have organizations around the world scrambling to help. Standing behind many of those organizations is a unique supply chain software and services organization, Aidmatrix. A non-profit that supports non-profits and relief agencies with the technology and supply chain services needed to get the right aid to where it’s in the most demand.
Aidmatrix is currently working overtime to support the relief efforts in Haiti. AMR Research recently spoke with former Wisconsin Governor Scott McCallum, who is now the company’s CEO and president, about the organization and its work. We offer this case study of Aidmatrix’s work with a call for help. If you’d like to give to the relief efforts in Haiti, Aidmatrix has set up a donation site where organizations are listing specifically what they need (http://www.aidmatrix.org/haiti.htm). You can help fill those needs, whether it’s through cash or if your company has the needed supplies
Trying times like these demonstrate why AMR Research is glad we’re in a position to showcase and share the supply chain best practices that get help where it’s needed.
Have you ever considered taking the air or reconfiguring your current packaging?
Many companies do not take the time to analyze their current packaging of finished product once the product has been prepared for the end-user.
Many times I have walked through distribution warehouse centers and simply picked up a master carton of blister carded product and gave it a real good shake it’s amazing how much wasted space is in that carton.
Think about it, air probably makes up 10 to 15% of the carton contents along with the blister carded product and serves absolutely no purpose other than taking up excess space.
Multiply that carton by how many other cartons are stored on that skid with the 10 to 15% of excess air contained in the package and overall you may have 75% product 25% air stacked in a single bin location.
Excess air in packaging results in higher warehouse storage costs, increased classification of product for carrier tender equals higher transportation costs, plus out of spec carton configurations results in higher component costs.
In the grocery industry many consumers will start seeing new package configurations for many of their favorite cereals and snacks, manufacturers of these products are developing ways of reducing size and packaging costs by reconfiguring packaging and ensuring product integrity.
It is important for manufacturing to periodically review and evaluate current packaging of their product, in order to determine if costs and distribution in transportation are being maximized and are not storing excess air in the packaging.
1 commentJanuary 7th, 2010Paladin Associates - Rick Schlegelmilch
Employee benefit plans are a critical component of a company’s ability to attract and hold talent. This sacred task often puts price negotiation with service providers in the hands of outside HR consultants and internal Human Resource specialists. While these people have good intentions, they are often ill equipped to work the cost AND service angle. All Drug plan administrators have plans to help companies control drug USAGE but they rarely address the sourced COSTS of the medications, outside of generic substitution efforts.
Paladin Associates found ourselves working with a client where this paradigm was in full effect. Paladin has access to a buying group for Rx Drug Benefit Programs that could take our clients 2000+ insured lives and add them to the consortium’s 400,000+ insured lives thereby reducing costs significantly for our client. A combination of lower sourced price and larger share of manufacturers’ rebates comprised this savings opportunity.
Armed with hard dollar savings projections based on actual medication usage by the client’s employees, we approached the client’s incumbent benefit service provider. Sensing their competitive disadvantage, the incumbent supplier agreed to an immediate 9.5% reduction for the remaining year of a three year contract, and similar savings for a new contract going forward. This translates to a savings of about $225,000 per year!
This proves that even in those semi-sacred service bastions that are not traditional categories for Sourcing activities, a different process and the right sourcing approach will produce cost reduction benefits for your company!
More companies are looking at centralized distribution and servicing their customer base in a timely manner in order to control costs, control inventory overhead and to improve overall customer service.
Centralized distribution sometimes has its own challenges and issues based on schedules, inventory and transportation network.
Other factors that should be considered is the size of the of the distribution center, the layout of the facility and capabilities of handling many more multiple shipments on a daily basis can result in many more LTL carriers.
Zone distribution to major market zones can eliminate much of the congestion and the handling of freight multiple times elevating issues with shortages, damages, and non-timely deliveries.
It is important to identify major market demographics pertaining to customer base, product distribution, field sales force and capabilities of end users and master distributors.
A major candle manufacturer based in the United States was faced with major issues such as damages, lost shipments, inventory shortages and untimely deliveries.
By developing major market zones utilizing 80/20, the manufacturer was able to overcome many of the above challenges and issues by driving carrier tender to specified market zones based on schedules ultimately utilizing local end-user delivery suppliers.
Recently, ICG Commerce announced that it signed a four-year agreement with Houghton Mifflin Harcourt Publishing Company ─ the world’s largest publisher of educational materials for pre-K–12 schools ─ to provide ongoing sourcing and category management services. HMH will leverage ICG Commerce’s deep category expertise, supported by a robust market information and technology platform, to drive cost reductions across its indirect spending in areas including IT, telecommunications, marketing, facilities management and travel.
Advance Auto Parts also recently signed a procurement outsourcing agreement with IBM. It will “allow Advance to focus resources on achieving its key strategies, provide savings opportunities by leveraging IBM’s buying power during vendor negotiations, give access to IBM’s global expertise and best practices for both sourcing and expense accounts payable, and improve processes and organizational capabilities with both procurement and accounts payable policies.” Click here for Advance’s full news release.
Over the summer, IBM announced that is has expanded its procurement outsourcing services offering with new strategic sourcing services and new procure-to-pay services. Writing in Supply and Demand Chain Executive, IBM’s VP of Procurement Services Bill Schaeffer noted that, “Once a company has gained full advantage from the potential value offered by sourcing and procurement, the only remaining direction to look is outside of the company for additional leverage and value. At the simplest level, this begins with benchmarking and application of ‘best practices.’ However, benchmarking really only begins to point us in the right direction and cannot deliver the full value that a company seeks. True spend leverage occurs not just when a company uses the best ideas of another business, but when it actually leverages the resources, infrastructure and spend of other businesses in concert with its own to derive more value than it can by itself.”
India-heritage service providers have also moved solidly into sourcing and technology. Infosys launched its “Sourcing and Procurement Academy,” focusing on a “sourcing and procurement curriculum to enhance competencies and meet the goals and objectives of both the employees and the company. Our academy enhances the skills of procurement professionals to deliver better value to customers.” Infosys has also launched a sourcing and procurement business platform based on the SAP SRM platform with niche applications such as workflow, OCR and document management. Other leading India-heritage providers such as Wipro, TCS and Cognizant have also built strategic sourcing capabilities by leveraging their technology capabilities and growing consulting capabilities.
Global leaders Capgemini and HP are also investing in procurement capabilities. Capgemini announced that it is working with European e-purchasing solution provider IBX to launch a BPOpen technology platform for procurement. Capgemini has indicated that “this new solution is aimed at reducing the cost of procurement for companies while also accelerating and reducing the time to ROI on the deployment of e-procurement” to “enable their clients to incur one-tenth the implementation costs over traditional implementation approaches in their sourcing efforts.”
There are a number of reasons that procurement outsourcing has expanded so visibly into strategic sourcing, category management and technology:
To increase spend under management, procurement outsourcing providers bring in additional, specialized category expertise, typically by expanding a company’s sourcing team from tens to hundreds.
These additional resources leverage real-time market intelligence gained from continually analyzing sourcing categories for multiple companies throughout the year (versus once a year or every three years) and use this information advantage to deliver better sourcing results.
To help companies achieve high levels of compliance and maximize realized savings, providers have invested heavily in developing:
Reporting and analysis tools to identify, monitor and continuously improve savings programs
Integrated processes, infrastructure and dedicated resources to actively manage categories and savings initiatives post-sourcing
Combined, these capabilities can help companies achieve and sustain greater results in a shorter period of time.
Procurement executives and CFOs are using this advantage to position procurement as a key source of cash or working capital that can be used to meet strategic objectives such as improving margins or funding growth and innovation. The procurement outsourcing sector is continuing to evolve, moving into project-based sourcing, logistics and other supply chain management functions. It is currently one of the most dynamically developing areas of outsourcing.
Add commentNovember 2nd, 2009Paladin Associates - Rick Schlegelmilch
A structured competitive bid will generally result in better pricing than one-on-one negotiations with suppliers. In one clear example, a client had recently secured a 20% cost reduction in facilities services from the incumbent suppliers using face-to-face negotiations.
Nonetheless, we recommended creating a structured RFP to include multiple suppliers as well as the incumbents. We identified an array of 12 qualified local and national suppliers. We developed a detailed scope with floor plans, unusual surface descriptions, number of bathrooms/fixtures, etc. In addition we expanded the scope of the RFP somewhat to make the offering more attractive. Terms and conditions remained the same as with the current suppliers. The client arranged group facility tours with finalists.
Ultimately, the incumbent suppliers won the competitive bid on a “total best value” basis, but the competitive bid netted an additional 20% savings! Because the incumbents won, there were no transition issues or expenses.
Particularly in tough economic times like these, competitive bidding is a most valuable cost-reduction tool to ensure best value… even if some savings have already been realized.
Many manufacturers are willing to work with suppliers and customers, and meet their logistical and distribution needs or requirements. After all, good practices increase efficiency and competitiveness, and save money. Furthermore, assisting customer and supplier needs usually means continued business.
On the other hand, the different set of requirements from each major supplier or customer may prove unattractive or overwhelming to manufacturers. Some smaller even middle sized suppliers and customers may not be able to devote the necessary resources on their own, to be able to implement necessary changes and to realize “potential” cost savings.
As a manufacturer interested in the “survival” or future “positioning” of your supply chain, be ready to actively participate in the supplier’s and customer’s efforts by investing time, resources and other assistance.
Some examples of assistance to suppliers and customers include providing access to tools, information, or programs that your company has had success with. The offering of training and mentorship from your staff or if your currently too lean at your business unit….implement through the assistance of a third-party consultant and being as available a resource as possible to key suppliers and customers when needed.
Your business is only as good as your long term “loyal” suppliers/customers… in this tough economy identifying new “opportunities” could spell the difference between “success” and “failure.”
Add commentOctober 20th, 2009Paladin Associates - Pat Horgan
Contract Document Control
In contract development, the party that controls the physical production of the contract document and the wording changes during negotiations generally has a distinct advantage. This is particularly true in long or complex contracts.
Subtle or undetected changes can possibly be introduced into the document by the “controller”, but without the other party’s knowledge. Sometimes seemingly innocuous, but subsequently important terms and conditions on someone else’s paper can escape notice. To the extent that one party’s language is used, subsequent legal interpretation of precedent, meaning, or industry practice may favor that party.
The party that controls the contract document has a leg up in the negotiations.
Controlling Terms and Condition
Similarly, both the Buyer and the Seller have to be careful that they are not inadvertently accepting unknown or non-negotiated terms and conditions that may exist on the other party’s standard paper, contract documents, invoices, or purchase orders. Often terms and conditions on a Seller’s standard invoice are different than those on the Buyer’s standard purchase order, and both may differ from specific contract language. Often, simply paying an invoice means the buyer has “accepted” the Seller’s terms. In a more recent complication, agreements may refer to Terms and Conditions that reside on the Seller’s website. This is sometimes difficult to manage because the website can be readily changed, enabling the Seller to change prices and terms at their discretion.
Often the Buyer firm, or the larger firm, or the firm that has better legal representation wins this negotiating element without the other party even realizing the issues involved.
Some things Buyer’s can do:
Buyer’s can generally insist that contracts be written on their paper, that they control and modify the physical document during negotiations, and that their terms and conditions prevail. Include terms and conditions early in the RFX process to identify and address these issues at the point of greatest leverage. Vendor invoices should always be reviewed, matched against purchase orders and/or contracts, and checked for inappropriate terms or conditions. Suspect invoices can be referred to properly trained Accounts Payable personnel or legal counsel for resolution.
3 commentsOctober 12th, 2009Charles Dominick, SPSM - Next Level Purchasing
In the last post, I described how price adjustment clauses are commonly misunderstood and end up causing pricing problems between buyers and suppliers.
So, what can you do to ensure that price adjustment provisions are adhered to when math isn’t everyone’s strongest skill (especially suppliers)?
Here are some tips:
Write out the price adjustment method in words in your RFP and contract
Include a formula in your RFP and contract
Demonstrate the calculation of a new price at a pre-bid meeting
Have a specific date for the adjustment
Sometimes index values are revised. So be sure to state that the price is adjusted on your specified date and will not be revised, even if the index is revised later.
One more tip…YOU tell the supplier what the price is, not the other way around.
Yes, we often lean on our suppliers to do certain things that we could do. After all, they are getting paid, right?
Well, some things you should do yourself. Calculating new prices is one of them.
Look, you’re going to have to do the calculation anyway to verify that the supplier got it right. And we’ve established that many professionals – even those with high levels of intellectual horsepower – suck at math.
So, don’t leave your pricing to chance. You tell your supplier what your new pricing is.
Well, that wraps it up for this series. I hope that you’ve learned some techniques for ensuring better communication with your suppliers for better supplier performance.
I know that if you apply everything I’ve covered, you will have fewer supplier problems and will minimize your chance of getting your industry’s equivalent of dog food delivered to you.
When a buyer is in a position to apply some leverage in negotiations with software vendors, there are three critical provisions that can be used, but may require a significant push:
Maintenance fees as a percentage of the discounted license fee, not the list license fee.
Language that locks the software vendor into providing a defined set of services throughout the term. Many software vendors offer several types of support, but will redefine the terms over time requiring buyers to purchase a more expensive level of support.
A fixed percentage of the license fees over a period – usually no more than five years.
On the other hand, here are two provisions, related to your software license, that would be great to have, but are very difficult to obtain because vendors don’t have much flexibility:
Paying for and receiving maintenance only when it is most convenient. Ideally one would like to begin paying maintenance only when licenses go into production and value has been gained, instead of immediately upon licensing.
Negotiating the price of maintenance down between 17% and 20%. Wall Street has adopted this percentage as a predictor of gross margins. Even though the ongoing maintenance revenue coming into a public company like Oracle depends greatly on other factors like the original discount and whether licensees simply drop maintenance, Wall Street can calculate this percentage and ask about it. If a public software company began allowing this percentage to erode, Wall Street would hammer it.
In summary, I suggest that buyers negotiate where the vendor has the ability to be flexible. Remembering these two steps will save companies a lot more money:
Get the greatest possible discount at the beginning and make sure that the annual maintenance percentage is tied to it.
Find out what discount the government and similar sized companies receive.
Don’t overbuy.
Purchase fewer licenses than project people may need. This won’t be easy because technical people naturally want to have enough licenses and budget managers don’t want to ask for more funds. Push back, because the penalty for not buying enough licenses is buying more, while the penalty for buying too many is annual maintenance on extra “shelfware”. Most software vendors won’t sell maintenance on just 75 if 100 are licensed.
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