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Red flags to look for when making a big IT purchase

Bart Perkins | July 13, 2016
If making a big buy is at all unusual for your team, you’re at a disadvantage to vendor salespeople who do nothing else. Here are some danger signs to look out for.

One CEO demanded a six-month installation schedule for a new system in order to meet commitments he had made to his customers. Without checking with her delivery team, the head salesperson agreed immediately. As it turned out, the delivery team said that six months was difficult but achievable — but they thought they had two additional months just to plan, before installation began. Nobody was happy when the differing expectations became apparent. The delivery team then wasted a month replanning in a vain attempt to fit within the six-month window, with the result that the project took nine months to complete. Needless to say, no one was happy.

  • The salesperson wants to be your new BFF. Most salespeople are outgoing and gregarious, but the days are gone when it was common to woo customers with liquid lunches and expensive outings.

Today, you’re much more likely to find the sales team and the IT buying team locked in detailed discussion’s about a product’s features, capabilities and suitability for the buyer’s environment. The best salespeople have deep knowledge about what are likely to be highly complex products. If you come across a salesperson who seems like a throwback, more interested in setting up dates for elaborate meals or golf games than in discussing product specs, you should see a red flag.

  • The salesperson is vague. Clarity is critical in any contract. Features, service levels and costs should be clearly documented and well understood. One company learned this the hard way. The outsourcer stated that the monthly cost would be capped at a certain amount, but when the buyer tried to model the costs based on the transaction volume and the cost schedule, the monthly cost was above that level. The sales team said not to worry because unit costs would be adjusted to cap the cost. Six months later, when the buyer lowered transaction volumes, the CFO assumed monthly costs would decrease below the cap. But because unit costs were never changed in the cost schedule, the decreased transaction volumes did not lower the bill below the cap. The buyer was very unhappy.
  • Some details are left to be dealt with after the contract has been signed. When it comes to getting a contract signed, the selling and buying teams are worlds apart. A salesperson’s bonus or very job could be at stake, and vendors are always looking to pump up their sales figures. Although buyers might have a solid deadline, they are less likely to have an incentive to rush things.

A signed contract encourages the perception that the hard work is done and there is no hurry to complete contract details. A signature removes the sales team’s incentive to complete the work, and the buyer is left with far less leverage to push the completion of those details. Because the master services agreement documents the entire relationship between the buyer and the vendor, it needs to be comprehensive and accurate. If you must sign the agreement before everything is final, include language that identifies the specific schedules or exhibits that will be updated. Then keep the pressure on your team and the sales team. When there are questions and the sales team is long gone, the contract is the first thing both sides will review. If the worst happens and there is litigation, the contract will be the critical document.

 

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