Does that mean the process must be combative in an attempt to achieve the desired results? Not if you really want to get what you need.
“Negotiation is not a game of war, or tic-tac-toe, or one-upmanship,” says Anthony Bosco, vice president and CIO of Day & Zimmermann, a Philadelphia, Pa.-based business services company. “You don’t need to strong-arm the guys across the table. They do not have the power to make the decision anyway. Instead, arm them with information — ammo really — so they can take it back to their bosses and get what you actually need.”
Build a Team
Many top CIOs believe that the negotiation process is about forming a team all around the table. According to Scott Griffin, vice president and CIO of Boeing Information Technology in Seattle, Wash., “A good strategic partner wins as much in the deal as you do, and you both are happy.”
That is not to say, however, that all vendors will approach the bargaining table with an equal sense of benevolence. “If they lack passion for all things past the sale, or they insist on peddling their products and services as-is rather than help you make it work from your perspective, you probably need to walk away,” advises Bosco. “Competition is so strong today that you should be able to find a quality vendor that will truly help you.”
There can also be legal ramifications that can upset a deal, so you’ll want to be sure that what is written matches what is spoken. “Value added services are the most important thing to look for in a deal,” says Ben Finley, senior partner of Finley & Buckley, P.C., a law firm located in Atlanta, Ga. “Just make sure all those promises make it to the paperwork.”
IT professionals who routinely win at the negotiation table and avoid bottom-line blunders know that success centers more on “buying in” than buying bargains. “It’s about getting the best value for the company, which does not always mean the lowest unit price. It means lowest cost of ownership,” says Boeing’s Griffin. “We had a supplier win a contract by coming up with the best bid for cost of ownership. We were able to get a lower cost of ownership, and they were able to get more revenue.” (article continues)
Know the Right Moves
Here are top tips for having a successful negotiation regardless of which technology you’re shopping for:
- Buy bulk “Boeing consolidated IT operations in 2004. As a result, we were able to aggregate our IT spending and get better pricing,” says Griffin.
- Play big “We believe in IT standards, so we do well when we are one of a supplier’s ten largest industrial customers,” says Griffin.
- Add value “Sometimes the value-added services from the vendor can actually outweigh the core product or service you are buying,” says Finley. “Make sure you consider the big picture and not just the deal parts.”
- Sweeten the deal “There is more value to the vendor than just the sale,” says Bosco. “If you offer to be a showcase account for the vendor or to introduce them to your colleagues at other companies, vendors will often reduce their price in exchange.”
- Do your homework “You lose credibility if you try to beat up a vendor with something you are not really knowledgeable about,” says Bosco. “Know what you are talking about, know what a fair price is, and know what the industry is moving towards in general before you enter negotiations.”
- Study the details “If you have good value data from suppliers, the data will set you free,” says Griffin. Get comparative data about competitors, third-party evaluations and comments and verifiable quantitative information. Your knowledge will set you free when you have in-depth, reliable information on which to make your decision.
- Read the contract “Ultimately, the deal is what is written on paper, not what you discussed in negotiations,” says Finley. “Read the contract; have legal counsel read the contract. If the paperwork isn’t correct, go back to the table and fix it.”
Remember that negotiation is a method of problem solving and a means to add much needed products, services and resources to your IT arsenal.
“At the end of the day, both sides have to have exactly what they need to stay in business,” says Bosco. “If you force a vendor too low, they won’t be there to service your account later and so you will only have hurt yourself.” And you’ll only find yourself at the bargaining table again — perhaps way too soon.