Jim and I were meeting with an organization last week that is embarking on a large software selection process. We talked with them about how to run the process fast and efficiently, choose the best vendor and get the best deal possible.
Since then, I’ve been noodling on one question they asked us: Who should negotiate the software contract? I didn’t have an immediate answer; Jim and I both cocked our heads and looked at each other and practically said at the same time, “probably the best team you have, regardless of their department”. We’ve seen good negotiations led by IT execs, business execs, procurement, legal, and outside consultants, and bad ones led by the same. Since then, I wondered if others had a more specific perspective on this question, and so I did a little searching on the web.
I was actually pretty underwhelmed with what I found. There were a few basic collections of tips from a variety of sources that are worth a skim, including Information Week, Forrester and Gartner. I also found one relevant blog on the “who should negotiate” question that Ray Wang just published yesterday.
Based on some further thought and a little reading, I’ll offer these additional guidelines to backup my first answer of “it depends”:
- It should be a team rather than an individual, since it is unlikely that one person has all of the knowledge and experience to negotiate the deal, unless it is something very small. The team will likely be a subset of the selection team, possibly with an additional member or two from legal or procurement.
- The team needs to be established at the beginning of the software selection process, when negotiations begin. Negotiations left until the end of the process leave a lot of money on the table.
- That team should be consistent across vendors, and should be the only group communicating with those vendors.
- Legal likely needs to be involved at some point. They will consider risks and unforeseen circumstances outside the core evaluation.
- Procurement may need to be involved, especially if there are cross-project or cross-domain synergies.
- And most importantly, the team must have domain expertise. That includes a deep understanding of the company’s needs and requirements, the vendor’s capabilities, weaknesses, and interests, and the overall vendor landscape.
As always, I’d welcome other opinions … who do YOU think should negotiate a software selection contract?