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IT Negotiation Top Tips to making great agreements possible

June 9, 2008

The terms “contract” and “agreement” are used interchangeably throughout the industry, and essentially mean the same thing. An agreement between an organization and the chosen vendor identifies the obligations between them, including deliverables, services, and responsibilities. The agreement is the most critical outcome of the negotiation process.

  • Single point of contact: Negotiating IT products and services requires clear and unambiguous communication between the parties. To accomplish this, it is necessary to assign a single representative from the IT organization (usually the Project Manager) to communicate with a single representative from the vendor organization.

  • Dispute resolution: Be aware that disputes will happen during the course of negotiations. Handling them in a professional manner will convey a sense of authority and place the organization in a more commanding position. Never shout, become violent, or embarrass the organization with unprofessional behavior.

  • Change control: During the negotiation process, hundreds of changes will be made to purchase orders and contract documents. Never hide anything. It is imperative that changes be evident to both parties. Organizations should use a word processing application that enables version tracking and comment insertion

Buying IT systems, software, and services was a simple task- there was IBM, Unisys, and a few smaller vendors. While the needs of every business were different, most companies were not concerned about pricing and negotiation since vendor options in the marketplace were limited.

Today, competition and the birth of new technologies are strongly striking the market; and they have unleashed one of the most focused marketing campaigns ever for IT vendors. IBM pushing Linux, Microsoft promoting Windows, and Apple promoting Mac OS is just one example of an increasingly competitive campaign to win IT executive support.

The negotiation tactics and processes described here place IT executives in a great role to make a difference in their organization’s cost reduction strategy by obtaining better agreements. It is an irregular marketplace with many options composed of small, medium, and very large vendors. In the future, expect more vendors, newer technologies, and more changes in the way IT assets and services are consumed, bought, and utilized. As a result, using the right negotiation tools and tactics will be critical to ensure reliability, growth, and adaptability of business and IT operations

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