Software Negotiations: Stakeholder Alignment and Leading the Negotiation

Posted: 08/10/2018 - 23:39
This article is the second half of a two-part series regarding software negotiations. The first part focuses on advanced planning and creating competition.  
In the first half of this series, we covered the importance of collecting crucial information regarding your software spend, user details and requirements. The next step in the process is analyzing the data to understand the available next steps and points of negotiation. But, before you head into negotiations with your respective vendors and break out the pen and paper to finalize the contract, be sure you’re aligned with your stakeholders. For many organizations, procurement staff are dedicated to IT but not under one business unit. As a result, the goals of each respective business unit vary and coming to a decision on selecting a software provider requires additional conversations. 
Gaining alignment begins with sharing the sourcing responses and providing all decision-makers with an opportunity to review and become familiar with the contending vendors, their capabilities and pricing. Procurement teams can enable the decision-making process by creating an objective report that summarizes the sourcing results (RFP, pricing analysis, etc.), as well as the go-forward recommendation. Beyond simply sending this report out via email to all involved stakeholders, procurement teams should set aside time to review the report with stakeholders. Since the results have already been shared, this review should be more of a conversation regarding the next steps, rather than a detailed presentation of the results that could leave stakeholders feeling like they’re drinking from a fire hose.  
Building this extra step in to the software sourcing process creates the opportunity to discuss and address any gaps in next steps and recommendations. The key here, however, is a combination of active listening to understand stakeholders’ concerns and agility in adjusting the recommendation if need be. These constructive conversations will reinforce alignment between procurement and the involved stakeholders and allow the process to move forward. 
While those initial steps in the process may include additional scoping calls or demos/proofs of concept, you will eventually make your way to the negotiation table. Now is procurement’s time to shine by effectively managing the process on behalf of its stakeholders. 
This includes:
  • Establishing a realistic timeline: Work with your stakeholders and the supplier to understand, based on capacity, a realistic date to have pricing finalized and begin contracting. If you’re in the midst of a renewal, this will most likely be dictated by the expiration of the current solution.
  • Assigning responsibility: Communicate to your stakeholders and selected supplier that you will be the primary contact during the negotiation process. A single point of contact during this process is crucial for a clear flow of communication between the business and the supplier, as well as to navigate any obstacles that may arise.
  • Define targets: Use pricing collected from the market (e.g., pricing in the market is 10% lower than current/proposed pricing) or put a dollar amount on any SLA violations and low utilization rates. When communicating targets to the suppliers, make sure you are doing so in a cohesive manner that has the full support of your stakeholders. You don’t want to be providing feedback piecemeal as something will more than likely fall through the cracks.
  • Stay informed: During this process you may want to consider joining all calls your stakeholders have with the vendor. While you are the main point of contact for all things related to the pricing negotiations and procurement process, if it is an existing vendor, there might be solution-related calls. This does not mean you need to be an active participant, but being present keeps you in the loop on any service-related updates, especially anything that might be coming in and out of scope. 

Going to market for software can be tricky, but procurement teams are in a prime position to make sourcing and negotiation a seamless process. Beyond pricing, procurement can help stakeholders gain a clearer picture of their software needs and spark the conversation not only for securing more competitive agreements but also for vetting new or additional tools that can better serve their needs. When approached as a collaborative effort, procurement can drive more value out of software agreements and ensure stakeholder satisfaction.


About The Author

Kevin Fraser's picture

Kevin Fraser is a Senior IT Sourcing Analyst at Source One Management Services. With years of experience in the IT and Telecom categories, Fraser bridges the gap between Procurement and IT to help companies find the right products and services for their unique infrastructures. Through strategic sourcing and procurement best practices, Fraser provides companies with a clear view of the market landscape and decision support to select a best-fit vendor while getting the most value for their IT and Telecom budgets.