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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.

Weiss: I'm not a fan of the term, win-win. It's a loaded term. And if you went into a conference room and asked six people to define it, you'd probably get at least five different answers. Far too often, in business and even in governmental negotiations, people view negotiation as all about compromise. I give a little, you give a little, and we both win. As an organization rooted in the writing of Getting to Yes, we've been accused of being the fathers of 'win-win.' But making trades is not what we meant.

Negotiation needs to be about creativity. It's about everyone putting their heads together to coming up with something even better than any of us originally imagined. Does that always happen? Of course not. However, good negotiators make it happen far more often than not. If enabled to, skilled negotiators can uncover and build new forms of value for all parties. They aim to expand the pie, not simply make sure everyone has a piece of it. You say people skills aren't sufficient. But clearly successful negotiation is about relationship building of some sort.

Weiss: There are so many parties involved in a negotiation. Simply put, there's you and your constituents and critics; the supplier and their constituents and critics; and often their subcontractors or suppliers with their constituents and critics. A good negotiator needs to facilitate effective conversations among all of those parties (even ones he or she may never speak to directly). That requires building at a basic degree of trust, having difficult conversations, and the jointly solving problems.

This can be left to the supplier to worry about, but a good negotiator will lead the way. They will never give in on the substance for the sake of the relationship—If you were a good partner, you'd just accept this price increase or key term—but they will treat others with respect, explore their views, dig for their interests, consider their ideas, and solve problems side-by-side. They don't do this because it's "right"; they do it because it makes the negotiation far more effective. Even if they need to talk about their walkaway alternatives, they explain the why's and how's, and leave the other party's room to respond.

You don't have to like the other party or play golf with them or go for a beer, but how you manage relationships will have an enormous impact not only on your current negotiations, but also future negotiations. It will not only impact the contracting negotiation, but all the negotiations that will occur during implementation. It's not just about negotiating terms and conditions, scope, metrics, pricing, and the like, but also about building strong relationships.


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