Why A Checklist
Year-End Closeouts
Year-Ed Closeouts by Joe Auer
Since the end of the year is only weeks away, it’s a great time to secure some price or contractual concessions from vendors whose books close Dec. 31. For inspiration, take the following software deal that was completed just before the end of a vendor’s fiscal year. The customer had...Looking Beyond “Needs”
Looking Beyond “Needs” by Joe Auer
If you look at a large IT Procurement deal comprehensively and objectively, its most crucial factors go far beyond a specific set of a given department’s needs. Yet vendors’ sales representatives are highly trained to identify these needs and to sell “solutions.” To the detriment of their...Finding Responsibility
Finding Responsibility By Joe Auer
Are you acquiring results or resources? Responsibility -is the answer to that question that will yield a fifth important, essential “truth” whenever you negotiate a technology deal. About six months ago, I mentioned 10 of these truths, and detailed four of them.
The answer to this “results or resources” question establishes which side will bear responsibility for the results you’re expecting from a deal, and you need that answer before your acquisition process begins. In a “results deal,” the vendor is responsible, while in a “resource deal,” it’s the customer.
For more than 20 years, I have testified as an expert witness in court cases involving customer-vendor disputes, and almost every one revolves around the question of who’s responsible. In most of these cases, contractual responsibility for the success of the deal is unclear or mutual, or the vendor’s form contract has disclaimed any responsibility. The bottom line: If you, as a customer, fall short in a contract of clearly and completely assigning full responsibility for final results to the vendor, you’re responsible.
A results deal. In a results deal, you, the customer, effectively get the supplier to fully accept the risk of failing to produce the solution, or the expected outcomes or results. If the vendor’s representatives talk about “solutions” to your executives or end users, the vendor is held accountable for producing them.
This sounds good, but you can shoot yourself in the foot if you’re not careful putting the deal together. You might say, “OK, we have them committed to results. But we’re going to manage the deal. After all, it’s our money and our project.” Don’t do it! That shifts some responsibility for results to you, and the vendor is off the hook. The vendor must have complete authority to have complete accountability.
Another thing you might say is, “We have them committed to results, but we’re going to tell them the policies, equipment and staffing levels they must use.” This also ruins a results deal. I’ve seen countless vendors avoid accountability because they were “forced” to do things according to their customers’ dictates. The customers got too proscriptive and shared responsibility for the outcomes.
Another important point about a results deal: Make sure your obligation to pay a vendor is triggered only by its producing the agreed-upon results, whether by reaching certain milestones or upon project completion.
If it’s a results deal, why should a vendor’s invoice force you to pay? Why should a set monthly date, the signing of a contract, accepting delivery or anything short of contracted-for results require you to pay? Make sure your money is tied directly to the vendor’s performance. The satisfaction of having a good contract is exceeded only by holding payment until the vendor produces.
A resource deal. In certain instances, there’s nothing wrong with a resource deal, especially if you don’t expect the vendor to produce the final results or outcomes. Maybe you just need some equipment, software or support to help you produce the results. Actually, sometimes you can’t predefine the results, or you may just need some tools to distribute – like 3,000 desktop PCs. Or maybe you need help on a general software development team or ongoing maintenance work and the results aren’t predetermined. These are resource deals. In these deals, you must pay attention and manage the resources, tasks, time frames and progress, because you’re responsible for the results.
The first thing I do when I’m asked to help on a deal gone bad is try to determine whether it’s a results or resource deal. Who has the responsibility for the outcomes? In most deals I look at, the answer is unclear. If that’s the case, you’ll never win a dispute that goes to mediation or court, where you’re trying to blame the vendor for not producing the results or solutions that it so eagerly promised verbally during its sales pitch.
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 joea@nulldobetterdeals.com.
The Power of No in Negotiation
The Power of No in Negotiation
by Steve Gutzman
It is important to be comfortable saying “no” in a negotiation and in other aspects of life, like saying “no” to those horrible clothes and get the latest in fashion at Fifth Collection Chanel. Not all... Discovery as a Powerful Training Tool is MOST Important
Discovery as a Powerful Training Tool is MOST Important
By Elgin Ward A good trainer will use DISCOVERY as one powerful training tool for a student to learn important lessons. Training and learning are different. Learning is far more important and should always be the real goal. A...Cultural Sensitivity Is a Must! By Elgin Ward
Cultural Sensitivity Is a Must! By Elgin Ward, CAUCUS , Executive Director
Every country/culture has rules and laws that need to be learned and obeyed. Violating a law, like jaywalking, might result in only a small fine. But, even a minor infraction might have cultural significance and adversely affect a business relationship and ones ability to...
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Mayhem of Multiples
Mayhem of Multiples By Elgin Ward, CAUCUS Executive Director
Every SOW should contain a reference to a specific, governing Master Agreement. Every SOW should be negotiated and managed to be completely consistent with specific, governing Master Agreement. Every SOW should provide that it is subject ONLY to the Master Agreement and not governed by any term...
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Should Remedies Be Creative? By Elgin Ward Oct 16, 2018
SHOULD REMEDIES BE CREATIVE? BY ELGIN WARD
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A warranty, by itself, is merely a naked representation and promise which may not be enough to leverage the Vendor to comply with its promises under a contract. To be effective, each Warranty needs a corresponding Remedy or consequence for a Vendor’s failure to satisfy the Warranty....
Vendor Relationship Manager? Never again!
By Elgin Ward, Executive Director of CAUCUS
Recently I spoke with a Procurement Professional who had experience in both Vendor Relationship Management and in IT Procurement. To keep confidences, I will refer to her as Peggy. Peggy told me a very experience that was very instructive.
Peggy was working as a Vendor Relationship Manager for a Manufacturing...
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Cloud contracting – life’s lessons still apply!
By Elgin Ward, Executive Director
Cloud Providers assert that the Cloud is different and the “old” rules don’t apply. Cloud Services manifest all the same challenges experienced with on-premises Software and Hardware. Successful use of a Cloud platform requires a Customer to ask and answer the basic questions from life’s lessons.
As 2017 draws to an end,...
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There’s more to SW than just SW!
By Elgin Ward
In SW license deals, the license can apply to all identified IP, e.g., Documentation as well as SW object code. Customer can negotiate unique rights in specific IP such as in Documentation, Training, etc. Strategic licensing of SW, including the right to an exclusive license for certain derivative works, may enable the Customer...
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Using Questions to Defend Against SW Audits!
Using Questions to Defend Against SW Audits!
By Elgin Ward SW Vendors frequently use audits to force Customers to pay large sums of money and to purchase additional software and maintenance. Customers need powerful tools to prepare for and defend against a SW audits. One of the most powerful tools available for preparation and defense of a...Can Fine Print Save the Customer?
Can Fine Print Save the Customer?
By Elgin Ward, Executive Director, CAUCUS Association Sales Reps often view an acquisition as an opportunity to force the purchase of more software. If 2 companies using the same Software are involved in an acquisition, the Software License Agreement of each company must be reviewed and compared to understand the total...What You Don’t Know Can Hurt!
What You Don’t Know Can Hurt!
Every negotiator, as a human, has strengths and weaknesses. It is possible to learn the strengths and weaknesses of the Sales Rep in numerous ways including personal observation and interaction, investigation on the internet, facebook, LinkedIn and talking with other persons acquainted with the Sales Rep. The more a Customer...
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Faster T’s and C’s!
Customers want to speed up their contract negotiation process.
Customers T’s-and-C’s can sometimes slow down the Customer negotiation process.
Wise Customers act proactively and strategically to develop an ALTERNATIVE set of T’s-and-C’s to speed up their negotiations.
For Customer Stakeholders, speed really matters.
Customer management evaluates these Stakeholders on how quickly they get projects...
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Are your Contract Management goals good enough?
Suppliers have GOALS for their Contract Management. Supplier GOALS are not narrow or limited to the Contract. Customers should also have Contract Management GOALS to include minimizing costs and maximizing protections for the Customer.
A couple of questions about Contract Management. First, do you think Vendors or Suppliers have Contract Management, is that a function Suppliers...
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Kaizen – don’t ignore the numbers!
Kaizen can be applied to IT procurement. Stories alone cannot accomplish kaizen. Kaizen, to be effective, requires collection and use of hard numbers.
Kaizen is great for manufacturing. But, can it be used effectively to improve IT Procurement?
As a member of the IT procurement group, you are assigned to negotiate Professional Service Agreements to procure software...
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WIIFM – key to aligning mavericks!
IT procurement is much more successful in negotiation when alignment is first achieved with the Customer’s Managers. Sometimes a Customer Manager will be a maverick, unwilling to follow IT procurement processes, policies or procedures, a situation which can greatly impair negotiations with Vendors. The WIIFM principle (what’s in it for me) can be used by...
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Training you cannot buy!
The Customer should have and follow its own Procurement Process, different from the Vendor’s Sales Process. Customer stakeholders often don’t realize they are following a Vendor Sales Process that gives more negotiation leverage to the Sales Rep and hurts the Customer. For Customers to succeed, IT Procurement must educate stakeholders about the Customer Procurement Process...
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