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
One Bite at a Time by Joe Auer
Here’s a strategy you can use to help gain and maintain negotiating strength. The key to this – called the “salami” strategy – is to disclose your goals to prospective vendors a few slices of information at a time, rather than give them the whole salami when they ask what it takes to do a deal.
Force the prospective vendors to fully address a few selected negotiation points without disclosing your entire position. Then negotiate only the set of issues you’ve selected and resolve those issues before discussing any of your other objectives.
Many vendors will press you to tell them everything you want before they concede anything. Tell them that they don’t need to worry about the rest of the things you want because if they don’t meet your initial issues, they’ll never hear your other points, but some other vendor will.
This technique has several advantages:
• It helps put you in control of the negotiations. Only you are aware of your full shopping list, so the vendor is far less able to map a comprehensive strategy to gain control of the negotiations. On the other hand, you can disclose, withhold or compromise on points as necessary.
For instance, if you win or lose some points early in negotiations, it may change the importance of subsequent issues. And later, you can add points that may accomplish the same goal as the points you conceded earlier.
• It permits you to add new considerations at virtually any point in the negotiations without being subject to the criticism of dealing in bad faith. A vendor might make such a charge if you said, “This is everything we want,” but then added other points after the original demands were negotiated.
• It puts pressure on the vendor to concede the previous two advantages. The vendor is prevented from being able to control your negotiating position. You’re in control of where and when certain points will be addressed.
• It allows you to assess and react to the vendor’s negotiating position with maximum flexibility. You can analyze a vendor’s reaction to various issues and adjust your negotiating tactics in response to the vendor’s reaction.
• It maximizes the likelihood that the vendor will agree to your specific negotiating points. If the vendor is aware that you will continue negotiations only if agreement is reached on the subjects under consideration, The vendor is more likely to reach agreement. In addition, if early agreement is reached on some issues, it sets the stage and chemistry for further agreement on other points.
• This approach also lets the vendor know that you take the negotiations seriously and plan to pursue each point vigorously.
There are a few techniques that help to maximize the effectiveness of this negotiating strategy. First, you can simply explain that the entire purpose of focusing on a few issues at a time is to determine whether there is any rationale for continuing negotiations. As one customer negotiator explained to a vendor recently, “Look, your time is valuable; our time is valuable. Before we clutter up the session with a lot of issues or waste time working through the contract, we want to know if you’re willing to reach agreement on a number of issues we think are critical to the entire deal.”
Second, recognize in advance that the vendor may do everything possible to avoid the “few slices at a time” approach. You should reject out of hand any vendor representatives’ comments reflecting their desire to go to management only once with the whole package. Simply refuse to accept the idea, or ask the sales reps why your account isn’t worth the trouble of going to corporate headquarters more than once. Better yet, ask them to bring someone to the table who has final negotiating authority.
Knowledge – especially of your opponent – is power when it comes to negotiating a deal. Vendors count on gaining as much knowledge of their customers as possible to boost their negotiating power and try to control the talks. But using the salami strategy can help prevent that.
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.