Don’t Underestimate the Power of Team Alignment in IT Vendor Negotiations

By Rich Staas

Director of Client Services, NPI

August 15, 2019
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IT Rich Staas

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The list of things that affect the outcome of IT vendor negotiations is long. We spend a lot of time on this blog talking about licensing and subscription pricing and optimization, as well as what’s driving vendor behavior – all of which critically shape whether your organization will receive a “fair deal” on IT purchases and renewals.

Another critical factor is alignment of the buying team. It’s not just intel about market pricing and points of leverage that creates a favorable outcome – it’s how well every member of your buying team is aligned around a shared process and protocol for interacting with vendors. I’ve seen many good deals fall apart because this aspect of IT vendor negotiations is overlooked.

Vendors Are Working a Playbook. What’s Yours?

Fact: IT vendors have some of the most highly skilled sales professionals out there. They are expert negotiators and every interaction they have with your organization is intentional, well planned and designed to maximize the value of the deal they’re pursuing.

Many turn to organizational reporting resources like Discover.org to gather information about your team, spend and organizational hierarchy. This allows them to gauge who the real decision makers are, other stakeholders, relationships (e.g. who is influencing who) and where they need better targeting and account penetration. It’s not uncommon for a vendor’s sales team to assign internal resources at different levels to different people within your organization as a way to gain knowledge and insight, assess risks and help with the sales process.

How to Arm Yourself Against the IT Vendor Sales Machine

Team alignment is fundamental to strong IT vendor negotiations. All vendor communications and interactions need to happen under the purview of a shared internal protocol and process. Who in your organization is a target for vendor communications? Who in your organization is allowed to speak to whom on the vendor side? What is each person’s role and what are they allowed to share with vendors? When do certain team members need to “go dark” or tell the vendor they don’t know any details?

Here’s an example of how this plays out: NPI was involved in a negotiation between one of our clients and a large ERP provider. It was clear that the vendor had assigned a VP to the client’s CIO, a regional sales rep to the director of IT, and the main sales rep to another director. During our frequent team meetings, we discovered that all three vendor resources had sent a series of similar questions worded in slightly different ways to the CIO and directors. It was obvious the vendor was trying to assess the risk of not getting the deal and to verify that our client’s position was consistent. Had the team not been aligned, the vendor would have undoubtedly gained the leverage it needed to secure higher pricing, lower discounts and/or terms that would have been more unfavorable to the client.

Without team alignment, getting the best deal for your organization is put at risk.  What is seemingly a simple “water cooler” discussion with a vendor could end up jeopardizing your entire strategy and negotiation position. Every member of your team should be aware that negotiations start at “hello” and the information they provide could have a significant impact on the outcome.

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