More than just squeezing down the price

Feature

More than just squeezing down the price

negotiate_150

Negotiation is a valuable skill that is used in every aspect of business. And while negotiation can be intimidating for many IT staff, you can learn a lot through dealing with children, believes Owen Williams, head of IT at global property company Knight Frank.

"The best management course I have been on was run by the Parents Link," he said. From this he learned essential negotiating tactics such as always giving the other party a choice to keep them happy at conceding the important issue.

"For example, you tell your children they can choose to hold your right hand or your left hand when you cross the road," he said.

According to Williams, this is not to trivialise the issue of negotiation, but to emphasise that, "Negotiation is a life skill, and in IT we negotiate on everything, from project objectives and setting tasks to budgets and staff appraisals. If you do not negotiate you set yourself up to fail."

It was these values Williams set about trying to instill when he arrived at Knight Frank to run the IT department.

"When I joined I found that IT was not functioning. The loudest business user voice shouting at it won. There were poor service level agreements with suppliers, and costs were too high. IT was delivered to business by several different IT services."

Getting the IT department into everybody's good books again was critically dependent on deploying good negotiation skills in two directions - the business and suppliers.

Williams' first negotiating challenge was his own business users. "As a property company, Knight Frank is full of negotiators, and they expect to negotiate on everything. They are also very good at negotiating."

This could be daunting, even intimidating, for IT staff. "I think that trying to equip all IT people to be able to negotiate with people who have powerful negotiating skills and want their own way, will not necessarily work," said Williams.

"So we have drawn up a framework for how IT should relate to business - for example, how project management is done. This framework then protects those IT staff - typically those like technical architects and developers, who are not natural negotiators - from agreeing to unobtainable goals. So each individual negotiation takes place in the context of the overall framework."

Williams' next negotiating challenge was with his IT suppliers. "I picked off the worst, exited from the worst contracts - it was a great opportunity to learn how to break contracts - and renegotiated to get a better price and service."

When it comes to negotiating with IT suppliers, it is important to take a broader view than just price, said Williams.

"We negotiate on the basis of the price we pay, on the value we are going to get, the time it will take to get it, and on exactly what the deliverables are - for example, are we going to own intellectual property rights and so on, which all needs to be documented."

The issue of value cuts both ways, for suppliers as well as customers. "You should know how your suppliers value you," said Williams. "We have suppliers who view us as a good reference site for them, and that makes us an attractive customer."

Value - not just price - is also something that business users have to understand, and that can sometimes be difficult, Williams said. Because his company is full of ace negotiators, they tend to think they must be better at negotiation than anyone in IT.

But, however true or not that may be, said Williams, "They do not understand IT as well as we do, so they tend to simply focus on cost alone. The trouble with having a 'churn and burn' strategy when it comes to beating suppliers down on cost is that it can damage the ongoing relationship you need to have with suppliers over the long term."

A similar caveat can apply to professional procurement teams. "You need to understand what you are buying, and why, how it will affect your business, and what the potential risks are. That detailed understanding may be beyond the scope of a procurement department," said Williams.

Some suppliers, however, are either so powerful in the industry, or so critical to your operations, that 'churn and burn' is not even an option.

"With Microsoft, for example, one issue is who you should negotiate with; initially they do not field the people who can make decisions," said Williams.

"You have to identify the middle ground. If you cannot negotiate on price, then you have to get things like knowledge sharing, consultancy and education on the table instead."

With all your suppliers it is important to be both informed and prepared. "Know your stuff. That makes it easier to avoid nasty surprises, such as a contract coming up for renewal with no clauses capping price increases in it, when you have allowed yourself no time to renegotiate anything," said Williams.

When it comes to buying consultancy, the keyword is trust. "It is about trust and the relationship. We use a consultancy on a small project first - ensuring we have the A team sold to us - and we tend to use the same consultancies, because they know us and we know them."

Should every negotiation you undertake end up with you being satisfied?

"Not always," said Williams. "You should not always think you have done a good job. You will not always be satisfied. If you are, your expectations are too low - you could do better."


Email Alerts

Register now to receive ComputerWeekly.com IT-related news, guides and more, delivered to your inbox.
By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

This was first published in February 2006

 

COMMENTS powered by Disqus  //  Commenting policy