Negotiation Special 3: Quick Tips and Take-Aways

So, we corralled views from a lot of experts, cross-pollinated a lot of sharp advices and got a really good inventory of the caveats that matter on an IT negotiation table. So many suggestions, so little time. Here’s a quick list of some Dos and Don’ts for that on-the-move glance.

1. Have a long-term view. Think in the language of TCO.

2. Be calm. It can be very easy to miss important things when other points shadow them.

3. Look at alternatives. There always are.

4. Do not pay lot for maintenance. Most of it may be linked to a salesperson's commission. Understand and try to figure out what a salesperson would be interested in and why.

5. What matters to a salesperson, may not be that relevant for you. Keep your poise. Don't get emotional in any way. Have the ability to walk away, if needed.

6. Now, 80 per cent of the cases the Managed Service vendors do execute well against improvement targets. So, fix the work before giving it to a vendor.

7. In Managed Services contracts where the company has more control, insist that the SLA performance be tied to the employees performance. It is a magical formula.

8. Do not go at it alone, bring the most current outside resources including external counsel.

9. Do not confuse BPO genre of vendors from those of Managed Services league. Both would require a different approach to SLAs.  It can be a high service outcome level for the former and very detailed (granularly measured) in case of Managed Services.

10. Do not treat IT contracts in ivory towers. They can’t work in silos. Every software license or server purchase has a business context after all. Work in that business orientation while negotiating any IT shopping.

11. Don’t settle for "invisibility" because it’s convenient or cheap.  In the end, it's not. Externally provided services may be in buzz, but check if it fits your wardrobe.

12. Find out the real 'value' factor of services. How much are they really used, and by whom, and to what affect?

13. Apply the incumbency rule. Ask yourself: How much would it cost to move this software out to make room for something new? Understand the money part.

14. If it's not on paper, it does not exist. Pay attention to documentation and legal nuances. Use specialist help, wherever you can.

15. In no way contract management initiative should be considered as one time project implementation. It is a slow, business intensive process requiring change management across the organization departments.

16. Contract is merely NOT about creating and managing a document or an agreement between two parties. It is a process that aims for continuous improvement in performance over the life of a contract. It is about achieving value for money. It is about balancing costs against risks.

17. At the most basic level, SLAs and KPIs impacting application performance need to be calculated backwards from the response time and cost perspective (or security requirements). 

18. Rather than isolating SLAs on a component basis, example - server availability, which is less important, think in terms of its impact on the application or applications it supports. This is key in calculating priorities for negotiating external services.