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How to win at the IT outsourcing negotiating table

Stephanie Overby | June 26, 2012
If CIOs want to get the most from IT outsourcing deals, they need to treat negotiation as an organizational business process--with training, tools, and processes--rather than an IT purchasing arrangement.

Who's your best outsourcing deal negotiator—Hank, the 'people guy' that everyone loves? Is your negotiating tool kit limited to your RFP templates and supplier scoring sheets? Is your goal to get the lowest prices for the highest SLAs in the shortest span of time?

That kind of ad-hoc negotiating behavior leads to failed outsourcing deals time and again. But there's a better way—and one that should be natural for process-driven IT organizations. It's time to start treating IT negotiations as a business process that permeates the entire IT organization, says Jeff Weiss, partner at Vantage Partners, a Boston-based negotiation and relationship management consultancy, who also teaches the science of negotiation to cadets at the U.S. Military Academy at West Point and MBA candidates at the Tuck School of Business at Dartmouth College.

And those skills, tools, and processes will reap rewards not just at the negotiating table, but in the complex day-to-day interactions the IT organization have with end users, customers, suppliers, and partners, says Weiss, who worked closely with the authors of Getting to Yes: Negotiating Agreement Without Giving In during his days at the Harvard Negotiation Project. talked to Weiss about how to build a business process that increases IT's return on negotiation. Why is it important for IT leaders to build negotiating capabilities at an organizational level? Isn't having a handful of skilled negotiators enough?

Jeff Weiss, Partner, Vantage Partners: Most IT organizations are engaged in many, many negotiations each day, both internally and externally. Negotiating effectively is critical for much more than structuring big deals, like systems integration projects, or large BPO or ITO contracts. There are important interactions with suppliers, partners, customers and end users on a daily basis, and many of those interactions involve working through differences or even contentious issues. Almost everyone in the IT organization is negotiating in some manner every day, and to enable their effectiveness takes providing organizational support.

Even if one is solely focused on that smaller cadre of people doing strategic negotiations, there is a common fallacy that if we have good "people" people, they'll get the job done well, or that an experienced negotiator can get it done on his or her own. Far too often skill alone simply does not carry the day. To be efficient, creative, and negotiate tough on the merits, negotiators need to be supported by a true negotiation process with defined activities, accountabilities, tools, and check points. IT certainly has defined processes for application development, testing, and rolling out new systems. CIOs need to start treating negotiation as a business process. Where should a CIO who wants to embed negotiating capabilities into the organization start?


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