The rapidly changing role of the CIO in enterprises demands many new skills- merely being a technologist is just not enough. The CIO is now fast becoming responsible for the financials of the IT organization as well. A major part of getting the best value from the IT budgets is all about identifying optimal technology vendors and negotiating for the best possible price. The new CIO needs to be a business man as well. What, then, are the tricks that a technologist at heart can use to ensure business sense does not elude him?
First of all, every single technology purchase should be the beginning of a long and mutually beneficial business partnership between the buyer and vendor. The responsibilities of ensuring this lies with the CIO, and it is certainly not an easy ask. One huge mistake most CIOs end up making is going for the pilot without negotiating the price first. Before they know it, they are in the vendor’s hands, and the vendors then have an upper hand in the negotiation. Here are some of the tricks that can help the CIO become a better negotiator.
Highlight the long term advantages
For any sales professional, a big incentive is to have a customer in a long term deal. Apart from the company profit, it is also in their personal interest to work on a big deal that will extend over a long term. So that’s infallible bait for getting good terms and costs for any product. Discounts, freebies, other offers will be easier to get when a salesperson sees a long term, big dollar deal.
However, a CIO needs to always keep his businessman hat on while negotiating, and always present that he has a number of options to choose from- vendors need to offer the best services or deals to get the contract. That’s the power of the contract signatory- to ensure that the sales person is just about on their toes. A few power games and lies will not hurt the process. But the CIO needs to take care to not come across as a liar or a manipulator. All negotiations should be in good faith, and transparent, with honest conversations. A CIO that a vendor cannot trust is harmful in more ways than one. They will lose face even as a technology leader, which is their first role anyway. The cardinal rule for this strategy- never use tactics like lying, withholding information or taking the salesperson for an empty ride- with no intention of buying.
IT negotiations are akin to all business negotiations and, as in all deals, the IT services or solutions deal is also critical for both companies- critical and profitable. Unethically trying to take advantage is not acceptable for both parties, and the CIO needs to keep their dignity in this conversation.
The bottom line is- it’s not enterprises sitting on the negotiating table, its people- humans, with attitudes, strengths, weaknesses, ethics and morality. Mutual respect and awareness of each other’s situation is a warming strategy- never compromise on the human touch and skills. Plain, direct and simple language, clear communication and a talk free of unnecessary jargon and indications is the best way forward. However, it is a good idea to enlist the vendors’ help in identifying the list of priorities, given the company’s business objectives and hence the technology requirements. The vendor is then bound to offer the best alternatives, most critical solutions at the best value- it’s a camaraderie thing.
A smart way to get the best deals is start conversations well in time before the earlier contract window closes. Then there is enough time to understand the competitor landscape and the options the market is offering. That will be the best support in negotiations- a complete awareness of all possible alternatives, and this knowledge can be leveraged in the company’s best interest.
Being a management leader should arm the CIO with enough research and management abilities to find out the background of the vendor company, its management and its financials, to look for any red flags. With ample time in hand, there is still the option of moving to another vendor, in case some unexplained facts come up in the course of this research.
With some key points in mind, and a firm decision to move forward ethically to negotiate a deal that benefits both the company and the vendor, it is not a difficult task.
After all, it’s just a matter of changing hats!