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Negotiating Technology Contracts
Have you ever tried to negotiate a deal for software, computer equipment, or consulting services with a technology company? The task can be daunting. Unfortunately, the sales forces of most IT companies are armed to the hilt with techniques to get the best deal for them, and not necessarily the best deal for you. And even worse, most of us computer folk (like myself) have never been trained in the art of negotiation, so it can be difficult to spot a snake in the grass. Before you begin negotiating a technology deal, know what you're getting in to. Solicit, Don't Be Solicited I receive at least three calls each day from technology vendors interested in selling something: hardware equipment, software tools, consulting services, etc. Usually, these calls are "cold". My name somehow landed on a telemarketing list in the hands of some vendor who is calling me out of the clear blue sky hoping that what they sell somehow matches what I need. You can waste hours on the phone letting some non-technical, script-reading, telemarketer or sales representative chew your ear off about their latest and greatest gizmo. Very rarely do these types of calls ever translate into a real business opportunity. The most popular cold call opening is "Good morning. This is Joe from the XYZ software company. We offer break through whatever solutions to help you reduce your total cost of ownership for whatever. Let me ask you, are your responsible for managing your companies whatever investment?" I get so many of these calls that I can answer them in my sleep. Years ago, I used to engage in some level of discussion with these people and it always went nowhere. Unless you really think they've got something you might want to buy, cut them off immediately. And just like any telemarketer, they have a scripted response for anything. If you answer the above question with "No. I am not". The immediate response will be "Could you direct me to someone in the company that is responsible for whatever". If you hand out a name and number, you're just passing the buck to some other poor soul in your organization. My favorite response is "No. We don't respond to phone solicitations." Nine times out of ten, they will give up. Sometimes, the cold caller will make another run at it and re-state their purpose or as they close the call, sneak in another sales pitch. "Yes sir. I understand. We offer something really great for your company and would love to send you a free trial version at absolutely no cost. Its free to try." You could be tempted to say "Free? Tell me more." Again, this type of response will just open up the sales speech flood gates and you will be wasting your time trying to get a word in edge-wise. Stick to your guns: "As I said. We don't respond to phone solicitations." is the proper response. If they make yet one more run at it, the final blow would be "Not sure if you're deaf, but I said we don't respond to phone solicitations. Tell me your name and transfer me to your supervisor." You will either hear apologies or a dial tone. Either way, you've just gotten yourself off of a call list and will never be bothered again. If you're interested in buying something, you do the calling, not the other way around. Put The Horse Before The Cart Never begin looking for technology solutions without knowing what you're looking for. Know the business problem you're trying to solve. If you know you need a software package that automates statistical analysis, flush out a more detailed set of statistics requirements (types of model, sample sizes, etc.) before you begin to shop around. Usually, software products have bells and whistles that, although look cool, are not absolutely needed. Before you begin comparison shopping, define your basic technology and business requirements. Knowing what you really need will give you confidence and leverage in a negotiation. Always Comparison Shop No matter what, always evaluate multiple options. If you're looking for software, don't get excited and latch on to the first package that looks good. And certainly don't give a sales rep. the impression that you're overly interested in their solution. They will be less likely to move during a negotiation. The IT market is over abundant with hardware, software and services solutions. Probably, you will have many options to choose from. Be picky! Create Your Game Plan Before you begin negotiating a deal with any technology vendor, plan your negotiation carefully. I have included some general planning questions that you should answer in preparation for a negotiation. The questions I have listed below may not make sense for your negotiation, so feel free to modify them for the occasion. The point here is to prepare in advance. You don't want to figure out the answers to these types of questions in the middle of a negotiation as it may give an inch to the sales person. I would even recommend writing the questions and answers on a sheet of paper for reference. (Price) How much do you think you should pay for this software or service? What is the market rate or street price? What are you prepared to spend? What is the highest price you would be willing to pay? (Features) What key features and capabilities are you looking for? Force rank the features. What does the prioritized list look like? Of the features you need, categorize them into two categories: "must have" and "nice to have". (Service Levels) Do you expect some level of performance from the equipment, software, or service? Are there up-time requirements? Do you need 24x7 technical support? Do you expect the vendor to incur a penalty if they don't perform up to your service levels? (Trades) What is most important to you: price, features, or service level? Force rank these in order of importance. Would you be willing to trade items between categories? For example, would you be willing to give up a certain service level for a lower price? (Suppliers) Which vendors offer something that you think could meet your needs? How long have these companies been in business? Are you doing business with them already? Do you have a good business relationship with them? (Gravy) If you had your druthers, what extras would you like the vendor to throw in for free? Would you like training or extra manuals? Would you like special reporting? You will probably have more questions in addition to the ones listed above. Take the time to write them down and create the answers. Once you have established your position, you will save a great deal of time evaluating your potential vendors and negotiations will be less painful. Lead The Dance When you are ready to face off with a vendor, do your best to drive the discussion. Get as much information about the vendor and their product and service before price enters into the discussion. Just like car buying, pick out your car (or choice of cars) before you negotiate a price. If you find that the discussion is prematurely heading toward pricing, bring the conversation back to understanding the product or service itself. If you're not ready to talk price, say something like "Right now, I am just evaluating your product (or service). Unless I think there's a real opportunity, I'm not prepared to negotiate price right now." Pricing for hardware, software, and services follow very different models. Hardware prices are fairly standard unless the product is new. Usually, the mark-up on hardware is very small (1-15%). On the flip- side, the mark-up for software is huge (100%+). Software is priced based on value, not the cost to the vendor so you can usually negotiate software prices down substantially. Services are usually based on labor rates and are marked up based on the demand for those skills (15-50%). When you are ready to discuss pricing, take the lead in the dance. Here are the steps to follow (in this order): Follow these steps, and you will strike better deals and build confidence in your ability to negotiate. What I have left out in the steps above are standard questions that vendors love to ask. Let me leave you with these questions, their underlying motive, and what you should say. The trick is to always put the ball back in the vendor's court to better your position:
There are others, but always maintain your control, patience and poise and always take the lead in the negotiating dance! About The Author Andy Quick is co-founder of Findmyhosting.com (http://www.findmyhosting.com), a free web hosting directory offering businesses and consumers a hassle free way to find the right hosting plan for their needs. Feel free to contact Andy at andy@findmyhosting.com in case you have any questions or comments regarding this article.
Latest News:Site: Yahoo! News Search Results for news [News] 5 O'Clock Shadow News you can't leave work without: Asamoah makes a deal News of record News of record reports for Chelan and Douglas counties Newport News police seek help on thefts from cars NEWPORT NEWS A rash of summer-night car break-ins and vandalism has police asking the public for help, and warning them to lock their vehicles. Newport News hit with rash of car break-ins NEWPORT NEWS -- Police are asking for help in solving a large number of car break-ins and vandalism cases in Newport News. According to police, 134 cases were reported in the area between J. Clyde Morris Blvd. and Oyster Point Road since June 1. Most of the incidents were between J. Clyde Morris and Middle Ground Blvd. and happened during the early evening hours. Police say many thefts happened ... NEWS ALERTS: Sign up to get breaking news on your mobile phone Get breaking local news as it happens. Enter your phone number: Standard Messaging Rates or other charges apply. To Opt-out text STOP to 4INFO (44636). For more information text HELP to 4INFO (44636). Contact your carrier for more details. Powered by 4INFO. Newport News police search for suspects in string of car thefts Newport News detectives are seeking assistance from the Community, in solving a large number of cases involving damage to, and larcenies from, cars. Newport News police seek information regarding larcenies and property damage NEWPORT NEWS -- Police are investigating 134 cases of damage to cars and larcenies from cars that occurred between June 1 and July 25, according to police. News in brief Here are a selection of brief news items from this week?s paper edition, and possibly a few news briefs that didn?t make it in the paper. Newport News townhouse damaged by fire NEWPORT NEWS A townhouse in the 1000 block of Willow Green Drive was damaged by fire this morning, fire officials said. One of the residents had minor burns to his hand, a Fire Department news release says. An off-duty city firefighter/medic helped evacuate the adjoining homes. News of the Past who has deep genealogical roots to Winston County, provides news from past editions of the Winston County Journal. The Winston County Board of Supervisors posted a notice of the new "Dog Law" which was passed in the July term. Site: news - Google News Arizona News Round Up - San Francisco Chronicle (blog)
MORE RESOURCES: Site: Yahoo! News Search Results for negotiation Aharon Adibekyan: Armenia has to withdraw from Karabakh negotiation process ?Withdrawal from negotiation process will alter Armenia?s image of an ?aggressor?, also offering Karabakh a possibility to make own decisions on its fate,? Adibekyan stated. Arab Peace Initiative Committee agrees on direct negotiation Arab Peace Initiative Committee agreed in a meeting Thursday on direct negotiation between Palestinians and Israel, leaving starting date to Palestinian President Mahmoud Abbas. China, Japan conduct first round of negotiation on East China Sea issue China and Japan on Tuesday conducted the first round of negotiation on the implementation of the principles of consensus concerning the East China Sea issue. eft.com This evidence includes, but is not limited to, the Price Negotiation Memorandum, a set of exculpatory materials that Agility says the government has tried to conceal from the public for more than three years. 'Desperate Housewives' end date is 'in negotiation' "Desperate Housewives" doesn't have a firm end date yet. It could in the relatively near future, though.Creator Marc Cherry says that he can see the series lasting a couple more seasons, "but I don't want to try and match 'Gunsmoke's' record.""It's in negotiation -- that's all I can tell you," Cherry says of an end date for "Housewives." "ABC is talking to people. ... There are meetings going on ... Turkey hopes to start negotiation over Iran's nuclear issue Turkish Foreign Minister Ahmet Davutoglu said Sunday he hopes negotiation will start between Iran and the so-called P5+1, the veto-wielding UN powers of Britain, China, France, Russia and the United States, plus Germany. Scarborough Police Explorers earn high marks in first aid Of 120 teams competing in events ranging from bomb threat response to hostage negotiation, Scarborough's team took fourth place in emergency field first aid. Teacher's Union and PCSSD negotiations stall Lawyers for the Pulaski County Special School District and the Teacher's Union agreed that after a day of negotiation, they will agree to disagree. SISTERS IN BUSINESS, THE POWER OF NEGOTIATION!, WEEK OF JULY 29-AUGUST 4, 2010 Do you remember the first time you bought a car? Were you young with no credit and little money? Were you older with bad credit and no money? Either way, you didn't boldly approach the salesman with a deal. You probably had more of a crossed-fingered; I hope they do business with me strategy. Iceland tells EU: "We keep control of fishing" ICELAND has told the European Union that its fishing grounds are not open to negotiation and must remain under the control of the Reykjavik Government. Site: negotiation - Google News Still no agreement on Mayweather and Pacquiao fight - Seer Press
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