ISM Presentation July 2009 Acrobat

NEGOTIATION SKILLS FOR
INFORMATION TECHNOLOGY
CONTRACTS

June 24, 2009
Suzanne Harris
Newport Beach, CA

Confidential Material 1

NEGOTIATION SKILLS FOR
INFORMATION TECHNOLOGY
CONTRACTS

Welcome!
Institute For Supply
Management


Agenda
Introductions
Basic IT Contracts and Deal Points
Sourcing and Information Technology
Negotiation
Summary
Question and Answers


Introduction To IT Contracts

Who Are We?
Strategic Sourcing
Indirect Purchasing
Procurement
Contract Department
Contract Negotiation Department
IT Contract Department
IT Vendor Management
IT Sourcing
IT
Vendor Management Organization (VMO)

Introduction To IT Contracts
Your name
Company
Title
What organization do you report to
What you are hoping to learn


Introduction to IT Contracts

“In business as in life, you don’t get
what you deserve, you get what you
negotiate”.
Chester Karrass

“90% of negotiation is preparation”.
Suzanne Harris


IT Contracts and Deal Points
Contracts Commonly Used in IT
*Non Disclosure Agreement, NDA
Hardware Agreement
Telecom Agreement
*Master Services Agreement
*Statement of Work
*Software License Agreement
Software Maintenance Agreement
Software as a Service, SAS and Hosted
*Recommended contract templates


Non Disclosure Agreement:

Protect confidential information
Unilateral or bilateral


Nondisclosure Agreement
NDA is required before company confidential
information can be shared.
Defines Confidential Information
Work product resulting from or related to work or
projects performed
General or specific to a project
Time Based - when does it expire
Do you have an NDA on file that is sufficient?


Nondisclosure Agreement (cont’d)
Who’s Paper? Theirs or yours?
Term of the Agreement
Why have term?
What is long enough?
Defines What Is Confidential
Confidential information disclosed remains
property of the owner

Nondisclosure Agreement (cont’d)
Non compete using confidential information
Damages for breach
State Law Governing
What is the down side? They steal your
intellectual property!
Your Leverage: We can’t talk to sales
without one!

The Master Services Agreement


MSA
Master Services Agreement, MSA:
Professional Services
Contractors
Consultants

MSA is basis for support on all other agreements.
Defines the on-going relationship between the two
companies
We do not have to repeat these terms in each SOW.


MSA
Term and Termination:
Defines the effective date
Defines the term
May describe auto-renewal
Recommendation: Effective until cancelled.
Can be cancelled without cause by customer
with 30 days written notice.


MSA
Invoicing and payment
Payment Terms
Penalties for late payment
Confidentiality
Intellectual Property:
Ownership
Indemnity for use of IP
Non-solicitation

MSA
Warranty
Provides protection of the SP failing to
provide quality services against the SOW.
Provides language on notice of failure and
“reasonable” response to cure the failure.
Indemnification
Held harmless by SP
Limitation of Liability


MSA
Insurance
Lengthy clauses detailing types and amounts of
coverage required.
Professional Liability $5M
Commercial General Liability $5M
Worker’s Compensation Insurance
Employers Liability Insurance $1M
Automobile Liability Insurance $5M
Fidelity Insurance (fraud, dishonest or unauthorized acts)
Cyber Risk $5M


MSA
Independent Contractor:
Defines the Service Provider, SP, is not an
employee- important for tax purposes.
Defines Liability: Work Site Coverage is not
covered by customers worker’s compensation,
liability or other insurance. Requires SP to have
a significant amount of insurance coverage.
Risk Management


MSA
General Provisions:
Force Majeure (French for "superior force"), also known as cas
fortuit (French) or casus fortuitus (Latin)[1], is a common clause
in contracts which essentially frees both parties from liability or
obligation when an extraordinary event or circumstance beyond the
control of the parties, such as a war, strike, riot, crime, or an event
described by the legal term "act of God" (e.g., flooding, earthquake,
volcano), prevents one or both parties from fulfilling their obligations
under the contract. However, force majeure is not intended to excuse
negligence or other malfeasance of a party, as where non-
performance is caused by the usual and natural consequences of
external forces (e.g., predicted rain stops an outdoor event), or
where the intervening circumstances are specifically contemplated.
Don’t let things like “delayed transportation” slip in.


SOW


SOW
Statement Of Work:
Key components include
Effective Date: Term of the agreement
Identify Attachments
Project Description
Objectives
Status Reports
Acceptance Criteria
Project Assumptions

SOW
Statement Of Work:
Key components include (cont’d)
Attachments:
A-1 Project Status Report Form
A-2 Change Order Form
A-3 Travel Policy


SOW
Statement Of Work:
Identify Key Roles and Assignments
Change Control
Pricing and payment
Termination
Total authorized dollars


SOW
Statement Of Work:
Deliverables
Estimated Due date
Materials
Expenses
Maximum Amount Payable


SOW
Statement Of Work:
Pricing methodology: Fixed fee versus
estimated dollar per hour -Not To Exceed
Are Travel and Expenses authorized? If
so, what is the Not To Exceed number?
Dependencies


SOW
Deliverables
Detailed description of Deliverables
Schedule of deliverables
Acceptance criteria for deliverables
Connection of payment tied to your
acceptance of deliverables
SLA's and penalties or credits for late or
unacceptable delivery

SOW
Most common deal points:
Clarity of scope
Delivery schedule
Locking in personnel by name
Fixed Fee versus Time and Materials
Expenses
Who’s travel policy
Change Order
Credits for late deliverables


SOW
Pros for Fixed Bid
Scope of work is clear
Deliverables are measurable
Timeliness is critical
Little chance of change in scope
Success is measured on the result
Clear picture of how much this costs

SOW
Negotiation Points:
Start With Your Templates
MSA on file or in conjunction with
Is software part of the deal
What is in it for them
Your estimate versus their bid
Determine risk factors

SOW
Cons For Fixed Bid
Scope is not certain
Supplier knows the scope is uncertain
Supplier inflates the price because of
the “unknown” and risk is shifted to him
It doesn’t meet the “reasonable” test
The “Change Order”

SOW
Pros for T & E Bid
Scope of work not clear
Nature of the work is transactional
Scope will be determined after work has begun
You want to pay as you go
Significant chance of change in scope
Success is measured by making progress


SOW
Cons For T & E Bid
Supplier is not motivated to complete
Could increase your cost
You hold most of the risk
Deliverables are clear
The “Change Order”


SOW
Negotiation tips for SOW’s
Each is unique
Diagnose which is better for your situation
Use
Competition
“Make in House”
Exceeds the Budget
Future business
Time
Authorized to negotiate and make concessions today

SOW
Negotiation tips for SOW’s
Consider
Use your contract template
Limit the scope and plan to add on as needed
Use acceptance criteria
Identify the personnel by name
Limit personnel changes using contract language
Estimate what it should be and negotiate for that
Expenses
Letter of Intent


IT Contracts and Deal
Points

Software License Agreements


IT Contracts and Deal
Points

Software License Agreement:
Your greatest leverage exists during
new acquisitions, or if there is the
threat of replacement .


SLA

First you get the pitch, promises, the power
points, the white papers, the demo, then…
The Contract

“Entire Agreement” means…..


SLA

One sided to protect the supplier
It takes time to identify and negotiate to eliminate
and minimize risk
The process takes time. Plan for it.
There is no perfect license model


SLA

Too simple: Lacks critical terms

Too Complex: Difficult to administer


SLA
The Contract
Definitions:
Affiliates, update, upgrade
Term and Termination:
Perpetual was the rule
Annual
Multiple year

SLA
Pricing, Payment and Delivery
Delivery
Invoices and payment
Related Services
Acceptance
Representations and Warranties

SLA
Indemnification
Confidential Information
Source code escrow
Dispute resolution
Assignment

SLA
90 day pilot
Metrics
Audits
True and True Down
May include maintenance terms or be
separate


Audits


SLA
Software License Agreements: Audits
Revenue stream
Costly
How often?
Most likely to?
If I outsource?


SLA
Contract Language
Notice
No interruption of work
Scope
Cost of the audit
Confidentiality
Effect of finding of out of compliance
Outsource provision

SLA
If you become knowledgeable:
Inform the CFO
Potential Liability
“Off Balance Sheet”


SLA
License Models
Named User
Concurrent-User
Role Based
Employee Based
Financial Based
Transaction Based

SLA
Named User
Advantage:
Traceability
Additions not required for multiple instances, failover or
backup
Easier when combining after a merger
Disadvantage:
Definitions of Name user can be misinterpreted
If the older, unused login ID’s the vendor could count
those as well
Multiple people can not user the same login ID


SLA
Concurrent User:
Cost effective for multiple time zones
Cost effective for the “occasional” user
Disadvantage:
Often this term is not well defined in he contract
and subject to interpretations (average users
versus maximum users)


SLA
Role Based:
Professional, employee, casual, normal, super
users
Multiple role-based user models reflect the value
used
Disadvantage:
Tracking usage can be difficult
It can be difficult to maintain the number of
licenses required for reach category
Contract language can be Material
Confidential
vague 51

SLA
Employee Based
Advantage:
The number of employees reflect the value received
Simple model for tracking purposes
Simple contract language
Predicable increases and decreases
Disadvantage:
The term “employee” can have multiple definitions
The contract needs clear language about the impact of
employee downturn
If a merger or acquisition happens cost can go up
immediately

SLA
Financed Based Model
This model uses total revenue, operating budget, or
cost of goods sold.
Advantage:
The vendor can track the metrics for annual reports and public information.
Usually just one number to track
Easy to budget for
Disadvantage:
No correlation between revenue and value received
Customer cost of doing business can go up without a decrease in software
cost
Surveys show that customer is perception that this model increases cost


SLA
Transaction Based
This model is becoming popular in the application software
space.
Advantage:
Customers can negotiate the cost per transaction
Disadvantage:
Transaction costs may not accurately reflect the value
Often poorly defined in the contract
May be difficult to count
May vary from month to month, quarter to quarter making
budgeting difficult
Suppliers want increases but no decreases in cost


SLA
Items for consideration:
License Type ESD
Discount Payment due upon
Metrics Based acceptance testing
No cost for Development Indemnification
License Term and termination
No cost for cold server Bankruptcy
Escrow Assignment
Reporting


SLA
Price protection for future requirements
Third party usage (example: Outsource services
from India, China, Mexico)
Acceptance testing
Warranty
True Up
Audits

SLA
Negotiation Points To Consider
Who are the vendors under consideration
Is their more than one?
Could we “make” the solution?
What discounts have they offered?
When is their end of quarter, end of year?
Can you get a third party to provide contract
guidance?
What other motives does the supplier have?

Software Maintenance


General Guidelines for Software Maintenance
Ranges from 15% to 25%
Computed off of list or discounted price
Include price caps
Include language on what happens after caps
Include language to drop support on unused
Select the appropriate level
Penalties for not making SLA’s

Maintenance Agreements
Services:
Upgrades: Previous versions/platforms
supported
Customizations and required support
SLA's:
Term:
Pricing and Payment Term

Price Protection
CPI
Security/System Access:
Personnel/Subcontractors: No subcontractors
used unless authorized by your company
Co-terminus maintenance for staggered license
deployments.


Inventory review
Is it global?
Biggest spend
Same supplier versus same product analysis
Can we co-term agreements
Identify maintenance we wish to terminate


Software Maintenance and Shelfware

Standard Shelfware: Never deployed
Under-Utilized Shelfware: Little usage
Bundled Shelfware:
Purchased together but not all launched
Each software module is embedded
Shadow User Shelfware: Purchased for all geographies but
not fully deployed
Shadow Device Software: Licensed to run on several
devices, used on one


Finding Shelfware:
Why:
Reduce maintenance cost
Reduce administrative cost
Understand first hand what not to do in the
future with license agreements


Finding Shelfware:
How:
Make it visible
Follow the money
Analyze the user base
Check client, serve, mainframe and cloud


Actions on Identified Shelfware:

Renegotiate support
Stop using and cancel
Start using of the software to drive value
Lessons learned


IT Contracts:

“A match made in heaven.”
S. Harris

“Begin with the end in mind”.
Stephen R. Covey
Author, The 7 Habits of Highly Effective People


IT Contracts:

Mission statements drive goals.
Common goals drive teamwork.


IT Contracts:

If 90 % of negotiation is preparation, then
internal preparation is the key to success.
Preparing with relationships
Preparing with data
Preparing with a strategy


IT and Strategic Sourcing
Maturity Model
Maturity Model

Step A- Survival –Administrative interface with Purchasing
Step B- Aware — Realization that infrastructure and operations are critical to the business-continued administrative
interface with Purchasing
Step C- Committed — Moving to a managed environment, tactical interface with Purchasing
Step D- Proactive — Gaining efficiencies and service quality through standardization, policy development,
governance structures and implementation of proactive interfacing with tactical interface with Purchasing. The start of
cross-departmental process alignment.
Step E- Service-Alignment — Managing IT like a business; customer-focused; trusted IT service provider and
interface with Strategic Sourcing.
Step F- Business Partnership — Trusted partner to the business and sees Strategic Sourcing role for increasing
the value and competitiveness of the business process.


IT Contracts:

Two Types of Negotiation

Internal Negotiation

External Negotiation


IT Contracts:
STRATEGIC SOURCING and IT DEVELOPMENT
MODEL
Diagnose your relationship with IT to determine
how to negotiate with your internal
Customer/business partner:

Administrative or Tactical

Strategic


IT Contracts:
Administrative or Tactical Role
Supports IT by:
Issuing purchase orders
Some administrative negotiation
Expediting orders
Clearing disputes with Accounts payable
Providing purchase order copies
Retaining documentation
Your Role: IT is your customer
Their Attitude: Just get it done!


IT Contracts:

Strategic Support is being a Trusted Business
Partner

Attributes of Sourcing Support:
IT Knowledge
Strategic Plan
Budget
Shared Goals
Contract Expertise
Negotiation Skills

IT Contracts:
Sourcing Managers preparation should:
Understand your company goals
What has happened so far
Budget
Technical specifications
Third party research
Time
Who are the major players
What do we want and need out of this?


IT Contracts:
Supplier Negotiation:
Expert Negotiator: Understand sales tactics and how to
maneuver around them.
Planning: Acting as a partner with IT agrees on the
action plan between the supplier and the company.
Leadership: Takes the lead with the negotiation process.
Communication: The supplier sees you as the decision
maker and the central point of communication for
business issues. IT supports this by not allowing the
supplier to go around you.
Supplier Identification: Uses previous experience and
knowledge, including third party research, to identify
potential sources of supply.

IT Contracts:
Supplier Negotiation:
Roles: Understands and clarifies roles and responsibilities
between the team members when necessary.
Teamwork: Attends IT planning and status meetings.
Sourcing: Understands the strategic plan and the
implications of how the plan impacts the sole and single
source limitations to supplier selection and negotiation.
Example: Oracle
Preparation: Understands and demonstrates the 90%
preparation rule.
Goal Accomplishment: Shares in credit and failure.


IT Contracts:
Sourcing Manager Role For Projects:
Identifies the SME/PM goals and objectives
Contacts Legal for participation
RFP as required: example corporate policy:
3 bids for purchases over $100K)
Utilize your company standard contract templates
Non disclosure agreement
Master Services Agreement
Statement of work
Software license and maintenance agreement
Leadership for negotiating price, terms and conditions
Receives the teams final agreement
Administrative retention

IT Contracts:
ROLES AND RESPONSIBILITES
Typical Cross Functional Sourcing Teams
Strategic Sourcing
“The Business” owner
IT Subject Matter Expert
IT Operations
Project Manager
Legal Counsel
Others as assigned


IT and Strategic Sourcing
Development Model
Step A- Survival –Administrative interface with Purchasing.
Step B- Aware — Realization that infrastructure and operations are critical to
the business with continued administrative interface with Purchasing.
Step C- Committed — Moving to a managed environment, developing a
tactical interface with Purchasing.
Step D- Proactive — Gaining efficiencies and service quality through
standardization, policy development, governance structures and implementation
of proactive interfacing and tactical interface with Purchasing. The start of cross-
departmental process alignment.
Step E- Service-Alignment — Managing IT like a business; customer-focused;
trusted IT service provider and interface with Strategic Sourcing.
Step F- Business Partnership — Trusted partner to the business and sees
Strategic Sourcing role for increasing the value and competitiveness of the
business process and risk mitigation.


IT Contracts:

TIPS FOR IMPROVING TEAMWORK
Understand their business
Develop your negotiation skills
Relationship building: Honey versus vinegar
Presentations: Get to know them
Ask for suggestions on how to improve the
working relationship

IT Contracts:
TIPS FOR IMPROVING TEAMWORK (Cont’d)
Roles and Responsibilities
Corporate Policy
What is in it for them
Examples of wins and show value
Responding within their time frame
Understanding what you are buying
Don’t have bureaucratic procedures
Display leadership on business issues

IT Contracts:

Soft Skills and Hard Skills


IT Contracts:

Soft Skills and Hard Skills

Driver
Analytical
Amiable
Expressive


IT Contracts:

“The Social
Styles
Task
Handbook”
by Wilson ANALYTICAL DRIVER
Learning
Tell
Ask
AMIABLE EXPRESSIVE

People

IT Contracts:

Preparing To Gain Contract Approval
Business Summary Template
Show the work
Show the savings
Approvals versus signature
How does the signatory want to interface?


IT Contracts: Negotiation
.


Basics of Negotiation
Anybody can negotiate
Attitude
Preparation
Relationship Rule
Time
The Iceberg
Practice
Knowing what you are up against


How is IT negotiation different?

Reporting structure
Pace
Impact to the business
Cost and perception
Niche

Contract Templates:
Provides a baseline of terms acceptable
Provides a starting point in the RFP
Provides a a standardization of terms
which you are the expert


The power of attitude:
“They have more power than me.”
“It is just company money.”
“I can’t ask for that.”
“No time to plan.”
We lose sight of the fact that we are up
against a skilled negotiator.

The Iceberg Rule


Negotiation Points To Consider
Who are the internal players
Is the budget approved
When is it needed
What have we done so far
Is the project Formal or Informal
What are the goals of the business owners
What are the goals of the IT owners
What are your goals


Formal Informal
Formal Team Members as needed
Written Objective Fewer deciding members
Statement/Goals Renewals
Milestones and status Smaller new deals
Consensus Not seen as strategic
Slower Information, RFI
Strategic
Increased Visibility
Requires a fully documented
business case


How does the supplier prepare?
Starts with looking at your home page
Are you profitable
Do you have budget
Who will talk to him
What is their leverage
Who is the competition and what is their motivation
They start high to see what they can get


From the Software Sales Point of View:
They spend 90% of their time preparing
The “Real Estate” mind set
If we are:
Adversarial
Ask for unreasonable concessions
Don’t appear to be a decision maker
What do they do….


What motivates them to give you the best deal?

What are the chances?
Real estate mind set

What about you motivates them to give you the
best deal?


What about you motivates them to give you the
best deal?
Homework
Your business acumen
Their perception that you have decision making power
They are unable to go around you
You share what needs to be done to get it done
Tough, but respectful
Make reasonable requests
Know when enough is enough

90 day increments
Predictable
Identify who has the relationship
Most have a significant base salary
License price versus maintenance cost
Lose early
Qualifying questions
Cross validate
Two weeks before end of quarter


Professional Services
Scope
Risk
Deliverables
Acceptance
Dependencies
Penalties



VSOE



VSOE: Vendor Specific Objective Evidence

What is it?
How does it impact software sales and
contracts?

AICPA Statement Of Position (SOP) 97-2, Software Recognition



VSOE: Vendor Specific Objective Evidence
Example:
Customized or configured software delivered but requires
professional services
Software Agreement
SOW
Example:
Software shipped to the VAR or SP
Parked software


“What don’t we ask Sales that we should?”



Our Preparation:
What questions do we ask Sales?


What should we be asking Sales?

“Help me understand….
“What are the discount thresholds?”
“What puts me in a different tier?”
“Every company is different, how does your work?”
“We appreciate the time you have spent getting to
understand us and our requirements. I would like
to understand how to best work with your
company.”

What Sales people want to say to us….
Adversarial
Your professional acumen
Reasonable
Ask for it all but….
Maintenance discounts
My concession on free professional services
When you ask to change your sales person
What is in it for me!


Negotiation
Opening, Target and Bottom Line
The power of competition
Consolidation: Co-terminus maintenance
Using competition (when you don’t have it)
The power of time
Silence
Third party research
Focusing communication

Negotiation
Opening, Target and Bottom Line
55% with metrics
65% with metrics
82% with metrics
90% with no metrics


Negotiation
The power of competition


Competition:
Do they know it? And can you keep it from
them if they don’t?
If they don’t know, act as if there is
competition
If they do know it acknowledge it


Consider using the following:
We may not buy it at all
It may exceed our budget
We may elect to make it in house
It may not be confirmed in our Strategic Plan
We need to make the decision or recommendation now
Don’t call him back
Tell him you that there is a perception that other
customers of his received a better deal


Negotiation
The power of time


Negotiation
The power of time

$1.1M in professional services
Opening $800K
Target $900K
Bottom line $1.1M


Negotiation
The power of silence


Negotiation
The power of silence

House hunting
S250K offer


Negotiation
The power of third party research


Negotiation
The power of third party research

$100M list price enterprise software
No price protection for future purchases
Opening: asking for three years
Target: One year
Bottom Line: No years
Achieved:

Benefits of Gartner or other third party
services:
Annual named user seat holder license
Research papers on specific technologies
“Magic Quadrant” for suppliers
Analyst provide guidance:
Pros and Cons
Pricing
BIC Contract terms


Third party research benefits:
Who are the major players
How are the major players ranked
Leaders, niche, visionaries, challengers
Pricing targets
Contract term targets
Negotiating tactics
The suppliers motivation
Changing product line
Competition is coming


Third Party Research Telecom:
Add a business technology migration clause
Add a business downturn clause
Add a rate review clause
Data circuits: identify and negotiate the biggest
usage


Tactics
The power of “We don’t need it”.
The power of “We are thinking of making it
internally.”
Good guy, bad guy
Asking Sales, “What is the best you have ever
given another customer like me?”
Asking Sales, “How are you compensated?”
The budget
Requiring higher authority approval, reluctantly


Preparation For Formal Project


Formal Project
Scope:
Develop the team
Objective Statement:
Musts Versus Wants
Develop the objectives
Request For Proposal


Preparation For Formal Project
Part One:
PMO Leads
The Objective Statement
“To select the best software application to manage OUR
Company financial operations”.
Musts and Wants
Selection of who is on the bid list
Consider incumbents, suggestions from research with
third parties, suggestions from team
RFP- include your contract templates
Taylor questions so that answers will be quantifiable

Preparation For A Formal Project
Part Two:
Analyze the responses
Provide a copy to your third party adviser (Gartner)
Determine the two (or one) on the short list
Spreadsheet their offer(s) against your goal
Review with Legal


Negotiation Points:
Type:
Enterprise, single user, concurrent
Does the supplier offer different choices?
What are the costs of these choices?
What is the strategic plan?
Why are you recommending one of the other?
Ownership Language:
What happens if you are sold or taken over?
“Sure, I will sell it to you again!”


Part Three
Schedule a negotiation preparation meeting
Identify items for negotiation
Legal
Business
Opening, target and bottom line
Who is on the negotiation team (roles)


Part Four
Meet with the supplier
Reassess
Repeat until concluded


Term
License Models: Grant Of Usage
Enterprise
Perpetual
Annual
Concurrent User
Term per user
Which one for which deal?

Example One: Maintenance Cost
Four Years ago bought a $5.0 M software license
package (perpetual) with maintenance cost of $1.0
M per year
Maintenance is up for renewal in 3 months
In 3 months it is the suppliers end of quarter
License Application suite is for Marketing
Documentation showed 10 different applications
Supplier threw in the other 8 for “free”
This is called “shelfware”.


Maintenance Cost: Preparation Meeting
Meet with IT and reviewed the history

Did we still need it?
Will we need it in the future?
Can we buy another product cheaper?
How many times have we called for support or updated:
How many of the ten applications have we launched?
Will we ever want the other eight?
Cancellation Requirement: Requires a thirty day written
notice


Maintenance Cost: Planning
Communication
Timing
Sourcing to contact supplier and convey:
Shock
Opening
Communication


Maintenance Cost: Supplier Response
First thing supplier does
SME calls Sourcing
IT steps in
Supplier provides first offer
Asks about internal process


Maintenance Cost: Our Response
CIO does not take rushes on his desk.
30 day cancellation letter
Call the supplier
We don’t need it for that price.
What we are ready to do


Maintenance Cost: Supplier Response
Supplier submits
Expedite

Savings is $800K annually


Example Two: Enterprise Software
List Price $100M

Iceberg
Preparation
Delivery
Results

Example Three: ESD
Three year agreement showing “Deliver Media”
Total Tax implication: $900K.


Example Four: ABC John’s
Hosted solution
Incumbent, 10% reduction last year
Renewal is due in < three months
Preparation
Tactics Used
Result


Example Five: Financial Systems Software
Incumbent
Annual software maintenance renewal in three
months
Preparation
Tactics Used
Result
Supplier response

Preparation
Research the Current Situation
Is there a budget, if so what is it?
Understand what you are buying
What has already been done by IT
What are their goals?
Make or Buy
Sole, single or multi source


Research the supplier base
IT recommendations
Gartner For IT Leaders
Forrester
Tower Group
Supplier websites


Cost Savings:

Hard Cost Savings

Soft Cost Savings


Cost Savings:
Hard Cost Savings
From budget
From previous buy
From first proposal
*What you caused to happen


Cost Savings:
Soft Cost Savings
Payment terms
Penalties for late
Limited potential future increases

*What you caused to happen

Cost Savings:

What is the biggest problem here?


Summary
Each contract is different
Goal alignment
Preparation is key to success
Practice negotiation
Declare Hard and Soft cost savings


Summary
Suggestions:
Compile data on renewals
Look for co-terminus opportunities
Look for “shelfware”
ESD
Use third parties
Sharpen the Saw on soft and hard skills
Strive to be “Strategic”
Create or review templates
Use formulas or definitions for cost savings


Summary
Training For IT Contracts
Shadow others
Contract Templates, line by line
Learn how to research sources of supply
Develop a process to determine financial stability
Attend IT meetings
Ask to see the strategic plan and understand the budget
Network with those that know how
Teach someone


Time For Q & A
Questions and Answers

Contact me at:
Suzanne Harris
suzanneha@yahoo.com
Cell 831 332 3450


ISM Presentation July 2009 Acrobat

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Andere mochten auch

Andere mochten auch (14)

Ähnlich wie ISM Presentation July 2009 Acrobat

Ähnlich wie ISM Presentation July 2009 Acrobat (20)

ISM Presentation July 2009 Acrobat