Opinion: Negotiators should be held responsible

Are you frustrated by IT colleagues who are less than motivated to do a really good business deal when procuring expensive IT products and services? If so, let them know that doing a good deal is a good thing and can be reflected in their job performance reviews.

As customers, ideally, we should keep the shareholders in mind and strive to do the very best deals by obtaining the best value for the money spent and by minimizing the risk of not getting what we're paying for. Fortunately, the corporate purchasing department is functionally focused on these objectives. But much of the time, IT professionals who sit in on negotiations with vendors are only concerned about the technical issues.

Aside from forming a comprehensive, cross-functional team, how does management spur the negotiators from IT to do better business deals?

One of the best ways is to make them realize that the contract with the vendor contains keys to their job success. Do they want to make sure they get their project done on time and within budget? Do they want a product that works and does what the vendor says it will do? Everything needs to be in the contract in order to have any assurance that all of that will happen.

When the contract is done well, it can help guarantee that the IT folks get what they want and gives them and the company recourse if they don't. It should spell out the business terms of the deal and who is responsible for what.

IT contract enlightenment doesn't happen overnight. There's a clear education and awareness component here that management must recognize and address. The key is to make sure IT staffers understand that if it's not in the contract, it's not part of the deal - and without a good contract, this deal may pose real risk to their projects and careers.

Mail Bag

Mike, an IT senior vice president and director of systems operations at a bank, wrote to me, asking about two key contract issues.

"I have seen two areas which generally take up a good deal of time in our contract negotiations. One is the broad issue of vendor limits of liability - either for errors in their systems and/or for intentional acts on the part of their employees. For the former, it's hard to get them to step up to the plate, especially if the software is relatively inexpensive in comparison to the 'damage' it can cause if it doesn't work correctly. They generally try to limit the damages to some factor of the price of the software/hardware. As for intentional acts of employees (we want this if we have contractors on-site), they really avoid it like the plague.

"The second problematic issue is one of our confidentiality of the vendor's trade secret features and functionality of its software. They are very concerned about these getting into the hands of noncustomers. We use mostly off-the-shelf systems. As with a lot of companies, integration of these systems is critical, and additionally, at times, we use contract labor to perform some specific programming. (This could be the vendor of one of the systems we're trying to integrate, or a 'disinterested' third-party contractor.) Generally, the base contract of the licenser will try to make us indemnify them for confidentiality no matter what - even if we get a third party to perform some programming. We generally try to negotiate the base contract to state that the external parties work out confidentiality without us (allowing the vendors to work together again for a different client without another round of contract negotiations).

"Have you seen any trends in the above issues?"

Thanks, Mike. You've hit on two of the important issues where suppliers try to allocate most, if not all, of the risk to the customer.

We normally receive a number of comments from lawyers and lawyer wanna-bes in response to issues like these. So let's ask them: What trends do you see on these issues, and what's your position on them as a customer or vendor? E-mail me. Thanks!

JOE AUER is president of International Computer Negotiations Inc. (www.dobetterdeals.com), a Winter Park, Fla., consultancy that educates users on high-tech procurement. ICN sponsors CAUCUS: The Association of High Tech Acquisition Professionals. Contact him at joea@dobetterdeals.com.

Copyright © 2000 IDG Communications, Inc.

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