In the complex world of IT procurement, managing hundreds of vendors across multiple agreements can feel like you're constantly fighting an uphill battle. A few years ago, I was hired by a large financial institution to do just that—take control of their IT contracts, many of which were coming up for renewal. The organization had centralized its procurement operations out of Toronto, but even with this centralization, handling over 500 technology vendors and more than 1,200 Master Agreements, Product Schedules, and Statements of Work (SOWs) was proving to be a logistical nightmare.

The Problem: A Flood of Renewals and Resellers

The institution was being inundated with a constant wave of renewals, each one threatening to overwhelm their procurement team. Adding to the chaos was the sheer number of software resellers they were dealing with—ten, to be exact—each with its own pricing structures and contractual terms. They were purchasing everything from Microsoft Office licenses to Symantec Anti-Virus subscriptions, often from different resellers at varying prices. Worse still, in some cases, there wasn't even a written agreement in place, or the reseller had only ever sold them a single product, leaving the institution stuck with paying annual support fees.

The Solution: Streamline, Consolidate, and Negotiate

Step one was to streamline the number of resellers by bringing annual maintenance renewals in-house. Many of these one-off resellers were simply passing on maintenance invoices from the software publishers with an added administrative fee. A quick call to the publishers to request direct billing allowed us to cut out these unnecessary middlemen, resulting in immediate cost savings.

Next, we issued a Request for Quote (RFQ) to the top three current resellers as well as two large Value Added Resellers (VARs) that the client hadn’t yet worked with. The competitive bid process, coupled with the announcement that we would be selecting one primary software reseller for 80% of the business, pushed discount levels from 15%-20% all the way up to 65%-75%.

The Result: Major Discounts and Added Value

Not only did we secure significant discounts, but we also negotiated terms under which the resellers agreed to take on some liability for smaller software publishers that were resistant to negotiating their click-wrap agreements. Additionally, some resellers stepped up their game by offering creative, value-added services at no extra cost.

Resellers play a crucial role in the supply chain, and when managed effectively, they can bring immense value and cost savings to your organization. But it’s essential to understand the landscape and leverage your position through consolidation and competitive bidding.

Final Thoughts

If your organization is working with multiple resellers, it's worth asking: Are they bringing more to the table than just turning around quotes? What additional value can they provide to justify their place in your procurement process? By taking a strategic approach to managing your resellers, you can turn a fragmented procurement process into a streamlined, cost-efficient machine.

Is it time for you to rethink your reseller strategy?