Why Stakeholders Are More Important than Suppliers in Software Negotiations

I've never been much of a soccer fan. There's just not enough scoring and body checking involved to keep me interested for 90 minutes. 

But I have to admit, I have tremendous respect for soccer players. Unlike other sports, soccer is truly a team game. Everyone on the team has to contribute for the team to win. You'll find the odd superstar here and there. But even then, no single player can carry a team on his or her back.

Software negotiations are very similar. I've been in my fair share of negotiations before. And every time we've "lost", it was because our team wasn't playing together, even if we had a superstar in our ranks.

In this video, I'm going to share with you the first essential rule of software negotiations: "Put stakeholders before suppliers." This is the first instalment in a brand new video series on software negotiations. Stay tuned for more!

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Video Transcript

Welcome to our video series on the five essential rules of software negotiations. Now, these aren't commandments chiselled into stone that Moses brought down from the mountain. These are tried and tested guidelines that Mohammad wrote down, and before you start firing off comments, understand that these are the five principles that I've used successfully for over 20 years. But they're not the be all that ends all of software negotiations, so if there's something that's worked for you that I haven't mentioned, please do share that with us in the comments.

Now, the five rules that we're going to cover are:

  1. Your stakeholders are more important than your suppliers
  2. Never take your suppliers deadlines seriously
  3. Maintenance renewals are always negotiable
  4. Make sure your contracts have acceptance criteria
  5. Always manage your ISV contracts in house

Today, we're going to talk about communicating with your stakeholders. I remember once I was on my way to a meeting with a supplier when my client, the company's CIO, pulled me into his office and gave me this gem of a pep talk. He said, "Mohammed, I know these guys have taken you out for golf and lunch and dinner, so you're probably thinking they're all friends. But when we go in there, I don't want to see any back slapping or high fiving. You tell them exactly what price they need to get to and then you don't flinch until they give it to us." 

I was a bit presumptuous for this executive to think that I was going to fold like a cheap suit just because I played a round of golf with these guys, but he was the client and if he wanted to play hardball with them then I was okay with that. But then this happened: We walked into the room, the sales rep came over, shook my hand, and the VP of sales turned to the CIO and said, "Joe, heard you just bought a new Maserati. Man, that's a sweet ride." I looked over at the CIO and it was like staring into the formal wear section of a Walmart. Joe spent the next 20 minutes gushing about his car, 10 minutes agreeing to everything the supplier put on the table, and then 30 minutes giving the VP of sales a ride in his new Maserati. 

And here's the irony of ait all, I know this VP of sales pretty well. He was a good golfer, he loved sushi, he liked to go camping, and he rode his bike on the weekends, but he didn't like cars. This man was not a car guy, or a musician, but he played my client like a fiddle. Why? Because my client didn't think it was important for us to have good communication, either before or during the meeting. But the suppliers team ran that meeting like a well oiled machine. They'd done their homework and they knew exactly what we wanted. 

They also knew that the only thing bigger than the CIO's ego was the engine in his Maserati. So, every time I tried to bring up pricing, the sales rep would give me some lame response and then his boss would try to bring the conversation back to the car. It was actually quite impressive to watch, and not that hard to do with a little bit of planning. But the most important thing is good communication, especially when you're negotiating software contracts, because unlike buying tables and chairs and office supplies, there's a lot of detailed nuance in software agreements, and if your teams aren't on the same page, it's very easy to miss those details. 

So how do you improve communications, specifically with regards to software negotiations? Well, the first step, like in every other aspect of life, is to talk less and really listen to what your stakeholders are telling you. I learned this lesson the hard way. I was once negotiating a deal and I got so focused on getting the price to what we had determined in our budget that I wasn't really listening or understanding what the stakeholder was telling me about the importance of the software being available. So, we were able to get a good price, but the service levels weren't great, and the resulting issues with downtime and support calls probably cost us more than what we saved on the initial purchase.

Now, I listen very carefully to what the stakeholders are saying before I put together a negotiating strategy, and I ask a lot of questions. Is this mission critical software? Is it client facing? How many people will actually be using it? And I establish parameters for communications during the negotiations, as well. Who's going to say what, and when? Who's going to be the good cop or bad cop? And what's the signal to stop talking and walk away from the table?

So, that's it for this video. Communication is key. Next time we'll talk about supplier deadlines. And if any of these videos strike a nerve and you want to dive into the details, maybe you're in the middle of a negotiation right now, please feel free to reach out to us. We'd love to get on the phone and chat.