“Business is not about hard negotiations. It's about mutually exploring a point of intersection where both parties find their objectives meeting.” - Sukant Ratnaka
There is a big difference between those who manage technology, and those who negotiate technology sales. Here are some insights from within a technology organisation for anyone who is negotiating with one. This is a two-minute read (beyond the regular minute), with four stages and some steps. 1. Who are the key players from the vendor?
What level of influence do they have within their organisation?
How is the organisation and the individuals assisting you perform for their performance year?
How important is your business to them?
If possible, at the initial meeting, get to know them as people beyond their role at the organisation. Take an active interest in them and be professionally personable. This will serve you well later. After you know the key players, what are their motivations and goals from your emerging deal?
2. The deal
Beyond the dollar value, how important will your business be to their profile?
Is there anything new/innovative within the deal? How proven is this? Could this be an area of mutual value?
What has been/will be automated or simplified? What are the benefits for the vendor and your organisation? Look to focus on growing the value of the deal for everyone involved, creating as much value as possible.
Beyond the dollar value for both organisations - what further value is in addition to this?
Involve others in these conversations, and apply lateral thinking. Often within technology deals a partner is involved; ask what could be of value for them.
3. Step back and document what you know Take a break. Based on what you now know, when would you not proceed? Document what you know, and your baseline. Be prepared to walk away if the deal is below the baseline. What is the window to reach possible agreement? The bigger the reasonable window the better the negotiation. If you are wanting to pay 10 and they are requiring 50, it’s unlikely (but you could wait like Sir Richard!), however 40 to 50 is possible. What is your baseline? If this is unlikely to be met, it’s potentially best to walk away. At this stage consider:
What is high value to the other parties but low value to me? Consider making concessions on these.
Endeavour to grow the value for the technology provider and their partner. How can value be grown further? Explore this with all parties. Reflect on the progress. Is the deal good for all involved and can it avoid win/loss agreements?
Only proceed with a win/loss agreement if it is a one-time negotiation. This is the only time you should consider winning. However, you need to consider the reputational risk of this action.
Potentially check separately with the technology partner. Sometimes partners come under pressure from technology providers so make sure there is value for them within the deal and that they can fulfil their commitments.
4. Closing the deal Finally, consider the number and timing of the concessions you could make. This is important as not everyone will be as mature in their approach:
Three to five concessions are ideal.
Don’t lead with the best concession or your baseline, as people need to feel like they are going to win or have won. Sometimes they will need to report back that they have won.
Put in padding to make sure you know where you could make concessions but be sensible and not ridiculous.
Technology providers and their partners are expecting some negotiation.
Here is a tip, if conversations or relationships become tense, consider taking the heat out of them by having a personable conversation. Seek to build genuine long-term relationships with an objective of creating value within your organisation and across those that serve yours.