Adversarial or collaborative? Here’s a story about a recent negotiation where the vendor representative took a very adversarial approach. Let’s see how it worked out for them…
Welcome to the Seprio Blog, a place where you will (hopefully) find pearls useful in protecting your business priorities, where we tell stories and talk about best practices in vendor management, negotiating, and contracting better. I’m your host and Seprio Master Certified Negotiator, Patrick Bohnenkamp. Today’s post is the first in a three-part series on the tenets of best practice negotiating.
Seprio President, Randy Roth, was recently interviewed on the Art of Procurement, the leading source for procurement professionals and leaders to learn from peers and elevate their impact.
Let’s get right to it: price is not pricing when it comes to many technology contracts. Pricing is the basis for determining the price you pay. Simple, not easy. After you and your team get past the “warmth” of the proposal evaluation, the contract comes. That’s often when things get considerably colder. Here are 3 tips for revealing the real price in complex technology contracts.
It’s no secret the hot spot for savings within healthcare organizations has become their extensive purchased services and outsourcing agreements. While the supply savings rock has already been turned over and squeezed for every dollar, many untapped savings are lying within an organization’s purchased services contracts. However, the biggest challenge in finding savings in purchased services is discovered as soon as the analysis begins, “…how do I even know if this is a good deal?”
Year after year Seprio meets with current and prospective customers to talk about their organization’s savings goals. Each customer is unique in many ways, however everyone’s initiatives have the same unit of measure, dollars. In many ways it’s a simple macroeconomic equation, if the dollars in exceed the dollars out, it’s a profitable organization. However in today’s times the competition for increasing the dollars coming in has risen to uncharted levels. In some cases it becomes impossible to predict and in turn the spotlight shines brightly upon the dollars flowing out of an organization.
Achieving contractual success in a volatile marketplace like healthcare requires the vision to continually shape and guide the negotiation process. In lock step, one needs to be able to foster and keep a positive vendor / customer relationship, but still drive the desired outcomes. This needs to be done despite the obstacles that are in your way (high switching costs / restrictive contracts) and the obstacles that are placed in your way (vendor imposed conditions) after your goals and objectives are defined.
It’s difficult to say how many times we’ve been asked this question, more than 100 probably even more than 1,000. Back in the “old Microsoft days…” the licensing schemes were so complex that it was literally necessary to map a 6 year strategy in order to completely optimize a licensing program. This isn’t the case anymore, nor is it with the other large box software/services companies either. While it seems very trite, the devil really is in the details. Too often organizations see these spends happening so frequently that they never take the time to get their arms around it as a collective organization.
In a traditional benchmarking setting a customer can research a catalog number, part number or even model number of the item being purchased. The research can take place on a platform as simple to access as the internet, or as complex as 3rd party research organizations that allow a customer to view the most recent purchases within a specific industry. Using either methodology will yield results consistent with one single outcome: price comparison. Again, for a commodity this is a simple bellwether check to see if one is in fact “getting a good deal.”