Ever talk to a con man? he\u2019ll tell you that it\u2019s the smarter folk who make the best marks. No one is really dumb enough to draw their life\u2019s savings out of the bank and hand the wad of cash to someone just so that they can hold it. No one, that is, except those who think they are canny enough to watch their money carefully.Most global CIOs rather fancy their prowess round the negotiating table, and I think this is why they get swindled so regularly, and so thoroughly, by software companies.Here\u2019s a version of the scam I ran into last month. A company is about to buy a new "global" ERP software package from one of these ERP companies that\u2019s promising all the usual global access hoopla. (No names here, and the circumstances have been altered for the sake of job protection.) Included in the deal is a "global" HR package that is desperately needed in the United States."How many seats shall we put you down for in HR?" asks the software salesman. "You\u2019ve got 11,000 employees worldwide, right? And they\u2019ll all be accessing the system. Better put you down for 11,000"?the CIO starts to say something?"and at a very substantial discount." The CIO hesitates, just the way a mark does when a con man reassuringly offers to let him hold the money again. Then the CIO acquiesces.But you see, that particular HR package doesn\u2019t do anything outside the United States. You can\u2019t pay anybody in New Zealand with the package because it doesn\u2019t know about New Zealand payroll. You can\u2019t report on total compensation in Japan with it because it doesn\u2019t handle Japanese pensions correctly. Very little data about Germans can go in there because of German privacy requirements.Inside the United States it will be used. Folks will use the self-service capabilities, and they\u2019ll be happy with them. Corporate headquarters will use it as the worldwide HR database. Every employee\u2019s name will go in there, and vital information will be copied into it from the HR systems that are actually used to manage employees in Tashkent, Uzbekistan, and Athens, Greece. But even assuming that some regional managers in Frankfurt, Germany, use it for appraisals, that only adds up to about 6,000 users.I\u2019m going into this in some detail be-cause I\u2019m trying to make it sound like a plausible mistake, but in my experience, grotesque overbuying without even the shred of an excuse is the rule, not the exception. And it\u2019s not just my experience. A senior executive at one of the Big Five?a former analyst at Gartner whom I\u2019d better not name?estimates that the typical buyer ends up using about 70 percent of the seats he pays for. That doesn\u2019t sound too bad, until you realize that this typical buyer is paying 40 percent more than he should. "And that\u2019s at the end of the day," the Big Five executive went on. "When you consider that they probably shouldn\u2019t be paying for users until the users start actually using the software, the cost is considerably greater."To understand how important this last point is, remember that the useful life of one of these packages is roughly seven to 10 years. If a global installation starts out with the German headquarters and the European manufacturing sites, it may be four years or so before the teams finish in Kuala Lumpur, Malaysia. Even if they actually succeed there and the package gets used, they\u2019ve had four years of zero return on the initial investment in seats, plus (if they\u2019re not careful) 15 percent per year maintenance on those seats, and all this for software that has six years left of useful life.You and I in our personal lives don\u2019t buy a car because we\u2019re planning on maybe using it in Brazil two years from now. But somehow when we sit down around a big cherry table on the top floor and we\u2019re spending the shareholders\u2019 money, it seems to make sense.Why do people get taken in like this? The reason at the top of the list has to be a completely unwarranted confidence in one\u2019s ability to strike a good deal. Buying software from an ERP salesman is pretty much like buying a Persian rug in Istanbul. If you work really hard and know exactly what you\u2019re doing, you might end up paying what you should. Otherwise you\u2019ll pay too much. The only question is, How much is too much?But tell that to a CIO. I\u2019ve done it. They give you that knowing smile and pass on. They might spend months with RFPs and long functionality lists, but before the pricing session their due diligence will be to call some 23-year-old analyst at AberGart or ForresMet and get some benchmarks. They don\u2019t think they need to do more. After all, they didn\u2019t make it to the C level because they were stupid.And you know what? Most of the time they\u2019ll be quite happy. After the deal is signed and sealed, both sides will get up from the table feeling confident that the other guy\u2019s been had. But only one of them will be right.It isn\u2019t just hubris, though. There\u2019s also corporate complicity. When you\u2019re a CIO and you\u2019ve got a hard-nosed business case that justifies an aggressive push toward a single global solution, the more money you spend, the more important your project becomes. And if you can negotiate a hefty discount on top of that, all the other C-level folks will pat you on the back. You\u2019ll be some kind of hero. But if you told your wife you\u2019d just bought a Ferrari on the same basis, it\u2019s doubtful she\u2019d be so congratulatory.And finally, there\u2019s a feeling that you\u2019re just paying the going rate, however disguised it is. "Most software ends up as shelfware," says Chuck Philips, the well-known Morgan Stanley Dean Witter financial analyst. It\u2019s built in to the economics of the business?simply put, you don\u2019t get all those developers working busily away in warrens from San Jose, Calif., to Bangalore, India, unless you\u2019re willing to pay for a lot of stuff that you\u2019ll most likely never use.Now, seat scams are nothing new, of course; CIOs were paying too much for too many seats back in the days of the IBM 360. But the global seat scam has some special characteristics of its own.First, it\u2019s much more work to manage seats on a global basis than it is to manage them by site, or even by country. If you\u2019re running a global installation, do you know whether you\u2019re paying maintenance on seats you\u2019re not using?Second, it\u2019s hard to manage the timing of a global installation. When you\u2019re sitting around the table and you\u2019ve already committed to your CEO that the Abu Dhabi site will be up and running in two years, you\u2019ll be genuinely surprised when it turns out to be four.And it\u2019s only going to get worse. With the arrival of the Web, software companies have taken to charging for all those "casual" users from other companies who log on to see where their order is. Sometimes it\u2019s a lump sum; sometimes it\u2019s a low cost per seat. This casual user charge is certainly a great value?every customer who uses the Web rather than calling saves you money. But however great the value, you still shouldn\u2019t pay for customers who don\u2019t use it.But how do you tell? Do you know how many customers there will be in Abu Dhabi who will use this service? Do you know when it will be implemented?and if it requires an Arabic self-service module that\u2019s still being developed?If you don\u2019t, I\u2019m sure your software salesman will be happy to give you an estimate.