Articles on IT Acquisition and Doing Better Deals
Tips & Tactics
- Negotiations: Principled Concessions
- Financial Analysis — a Refresher
- Presenting vs. Positioning
- Even Pros Make Mistakes
- The Power of No
- The Dip
- Caveat Venditor
- Champagne and Scarcity
- Urgency—Guard it at All Costs
- They Know That You Know
- Why a Checklist
- Beyone the Handshake
- The Challenge with Buying Technology
- The “Try It, You’ll Like It” Ploy
- The “We Don’t Need To Write That Down, You Can Trust Me” Ploy
- The “Low Ball” and “When I Hit Your Hot Button, I Gotcha” Ploys
- The “Price Protection Contract” Ploy
- The “Form Contract” Ploy
- The “Solutions” Ploy
- The “We Can’t Do It For You Because We Would Be Setting A Precedent” Ploy
- The “Unfortunately, I’ll Have To Get Any Changes Approved By Corporate” Ploy
- The “Price Protection Contract” Ploy
- The “Tie-In” Ploy
- The “Fait Accompli” Ploy
- The “Price Increase is Coming” Ploy
- Table of contents
- “We Don’t Need To Write It Down. You Can Trust Me” And Other Grim Fairytales
- The Negotiations Agenda Part 1
- One Bite at a Time
- The Negotiations Agenda Part 2
- Don’t Let Vendors Hold You Hostage
- The Right Attitude
- Finding Responsibility
- A Fair Audit Clause
- Looking Beyond “Needs”
- Before Saying “I Do,” Think About Divorce
- A ‘Top-Down’ Look In Challenging Times
- Don’t Allow Vendor Disappearing Acts
- Vendor Short-listing: The Long and Short
- If a Vendor Offers the ‘Lunch’ Ploy, Don’t Bite
- Make Sure Consultants Will Keep Your Secrets
- Two Essential Parts for Service Contracts
- Keep Consultants Far From the Enemy
- Be Wary of Annual Revenue Commitment
- Leasing’s Different When It’s Laptops
- Two Truths Behind Securing Better Deals
- Not in the Contract, Not Part of the Deal
- Feeling Safe With IT Security
- Avoid Surprises in Subleasing Deals
- Insist on Language to Cover Billing
- Manage the Contract
- Clear Ordering Procedures
- Winning with Leases
- A Ploy that Didn’t Fly
Clear Ordering Procedures by Joe Auer
When you review a proposed vendor contract, you’ll probably discover that only the most basic information is documented about a key component of the relationship: ongoing ordering procedures. If this doesn’t seem like a big deal, think again, because you could be left open to problems down the road at a very inconvenient time. Suddenly, an order of something you need desperately could be in jeopardy, and so could your project. In one particular case I ran across recently, the contract’s language stated that the customer could submit orders using the vendor’s standard order form. Electronic transmission was acceptable. The vendor could substitute an item of equal or greater value if the originally ordered item wasn’t available. Sounds simple, right? The problem lies in what’s missing from the ordering procedures.
Ongoing vendor supply contracts should clearly spell out how the ordering process works, including both parties’ responsibilities. The following are six key specifics to include in your agreement:
- Authorize certain customer personnel (usually designated by the title of a position rather than an individual’s name) who can place a binding order.
- Specify the order form to be used, such as the vendor’s standard form or a mutually agreed upon format. Specify the minimum information the order should include.
- Clearly spell out the vendor’s order acceptance criteria. This is very important. Don’t assume that a submitted order will automatically be accepted. The vendor should be required to notify you promptly that your order has been accepted and should provide a delivery date.
- Require the vendor to notify you promptly if your order isn’t accepted and to specify the reason. An order may be rejected simply because it’s incomplete. It’s important to understand why your order was rejected and how to get it accepted.
- If your contract allows for order substitutions, the vendor should also indicate any items that will be substituted, with specific details. Don’t overlook substitutions. Some may not work in your environment, so it’s better to find out before your order is shipped.
- Ensure that the contract provides order-cancellation procedures that indicate how and under what conditions an order may be cancelled as well as an agreed-to timing notification and applicable costs.
- Clearly define the manner in which returns are to be handled, and define any fees a vendor would charge.
Including these specifics in your agreements allows for a smooth, effective ordering process that increases the likelihood that a product will be provided in a timely manner. Leaving out necessary details may save time when negotiating, but it’s almost sure to add time and effort when you can least afford it—when you actually need an order from your vendor. So again, be comprehensive and clear in your contracting.
Charles McCain, an independent business management consultant in Georgia, sent me this sound advice: “Your Aug. 27 column dealt with the possibility of billing disputes. It brought to mind that you might consider recommending a binding arbitration clause in all high-tech procurement contracts.”
McCain pointed out that the American Arbitration Association (AAA) has panels for both commercial and technology disputes.
He continued: “In all the years I was with Xerox and buying hardware, software and services, I always inserted the standard AAA binding arbitration clause. Fortunately, it was never exercised. But I always felt more secure knowing the dispute would be resolved by arbitrators who understood the language and issues rather than by 12 people who were picked because they didn’t know anything. Also, my boss was pleased to know that the resolution would be private and that it would not make headlines in the local newspaper or The Wall Street Journal.”
You’re absolutely right. My only caveat is that you might want to specify that only certain things in your contract should be arbitrated, like billing disputes. Your lawyers may feel that other issues are better off being decided in court.
JOE AUER is president of International Computer Negotiations Inc. (www.dobetterdeals.com), a Winter Park, Fla., consultancy that educates users on high-tech procurement. ICN sponsors CAUCUS: The Association of High Tech Acquisition Professionals. Contact him at firstname.lastname@example.org.
Copyright by Computerworld, Inc., 500 Old Connecticut Path, Framingham, MA 01701. Reprinted by permission of Computerworld.