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
Vendor Short-listing: The Long and Short by Joe Auer
Implementing a “zone of consideration” – or creating a shortlist of potential vendors for a particular purchase – is a very important step in optimizing your IT procurement process. It normally occurs after potential vendor proposals have been evaluated. Other names for this step are “down-selecting” and “short-listing.” Whatever name you use, this is where you engage in critical communications with would-be vendors. After your evaluation, you should notify the vendors about whether they are in or out – that is, whether or not they’ve made the shortlist and qualified for the zone of further consideration.
Vendors out of consideration need to be told that they’re out, without completely eliminating them. Vendors still in consideration can be commended for their efforts thus far, as a goodwill gesture. But they must also be told that there’s still competition and that they must sharpen their pencils. Your essential customer objectives at this point are to maintain flexibility, establish some negotiating power and keep your options open. A misstep here can lose you some leverage.
For those vendors that are left out of the zone of consideration, a simple letter like this will do:
Thank you for your response to our [insert project name] request for proposals. Our project team has completed its evaluation of all potential vendor proposals. We concluded that our current requirements can be more completely met by other vendors. Accordingly, we will require no further information from you at this time.
This language notifies the vendor of its status, yet preserves your options by stating there’s no need for further information at this time. Most savvy vendors will gather that they haven’t made the cut but that they haven’t been absolutely eliminated. They can still hold out some hope. Some will follow up with a phone call. Simply state that you haven’t made a final decision. Preserving your options is paramount. Because some vendors that make it into the zone may be eliminated for various reasons, it could be necessary to move a previously eliminated vendor back into consideration.
If you eliminate a vendor and later have to plead with it to return to the discussion, you’ll have little negotiating leverage. In fact, you may end up begging. That’s not a pretty sight, and it could prevent you from getting the best possible deal.
Notifying those vendors that have qualified for the zone is easier, but it’s also important to preserve your leverage and maintain a competitive environment. A letter puts things in writing and provides a formal notice. Here’s the recommended text:
Thank you for your response to our [insert project name] request for proposals. Our project team has completed its evaluation of all potential vendor proposals. We concluded that your proposal may provide a solution capable of meeting our requirements. Obviously, this is subject to a closer evaluation of various aspects of your proposal, and to your satisfying any concerns we may have in this regard. Accordingly, we have placed you within our zone of consideration with the other potential suppliers believed capable.
We will be contacting you soon to arrange initial discussions of your proposal. Our objective will be to negotiate a mutually acceptable agreement. Please identify your negotiating team members, including their names, titles and roles. To expedite negotiations, we request that you limit your team to four individuals and include decision-makers on the team.
Please understand that we reserve the right to award the contract to any potential supplier at any time, without further notice to you. There will be no best and final bidding rounds or discussions of other potential supplier deals for you to bid against.
Having your very best deal on the table at all times – and thinking constantly about ways to improve it – will serve you well during this time.
This type of letter commends vendors for their success but also reminds them that they haven’t yet won the deal and need to remain competitive.
At this juncture, it’s all about negotiating power and control. To be effective, communications to potential vendors must inform but, at the same time, preserve your leverage as they compete for your business.
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.