3 tips for negotiating with your public cloud providers

It’s the end of the year and time to renew public cloud contracts. Here’s how to get the biggest discount from your public cloud provider

The last time you renewed or got a new contract in place with a big pubic cloud provider, how did your negotiations go? For most enterprises this past year, such negotiations did not go very far. These days, the amount of money on the table is much larger, and the public cloud providers are starting to negotiate more like enterprise software providers—like IBM, Oracle, Adobe, and SAP—than like public cloud utilities.

So, I am commonly asked, “How do I negotiate with my cloud provider when they already know that I’m dependent on them as my cloud platform of choice?”

Here are three tips that will give you some advantages, even if your back is up against the cloud wall.

First, make sure that you have other options and are willing to use them.You won’t have much negotiating clout if you don’t point to a cheaper alternative. That means you’re not only willing to relocate to that platform, but you’ve written an egress plan to do so. One of the more aggressive moves is to send that plan to the current public cloud provider you use.

By the way, you need to be willing to go in that new direction if negotiations go south with the current provider. That plan will give you the edge you need if you end up doing so.

Second, make sure you get the right comps. It’s a good idea to hire consultants who are aware of what other enterprises pay for that provider’s cloud service, as long as they are not violating a nondisclosure agreement.

If you wanted to buy a specific make and model of a car, wouldn’t you do some pricing research in the market? Likewise, it’s a great idea to know what others pay for the same or similar cloud services, and any special incentives that may be in play.

Third, be willing to wait things out.Walking away and going quiet on the sales radar is nerve-wracking to a cloud provider’s salesperson who’s watching a commission check disappear. You need to be willing to play the game of taking long breaks if things are not going your way. The idea is to see who blinks first—and hopefully it won’t be you.

If these seem like the same old games we in IT have played for decades, they are. It’s a silly dance, but if you get a million-dollar discount over the next two years, the dance is worth it.


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