In this month’s ‘ask the expert’, Ari Kopoulos responds to a reader’s question about negotiating with HRIS suppliers.
This editorial is first published in Human Capital Magazine Issue 9.6, Ask The expert: HRIS.
Q: We have identified our preferred supplier and are about to sign contracts; can you offer any tips on the negotiation process?
A: So you’ve made that important decision to purchase and now feel compelled to enter the elaborate dance of negotiation. This process itself sits somewhere between science and art, and is more often perceived to be a process of conflict. Let’s make this clear, effective negotiation is not about conflict, defiance or dishonesty. It’s not about posturing, bullying or threatening for that matter. Effective negotiation is about exhaustive preparation, utter clarity, and a sincere and demonstrated desire to fully understand each other’s needs.
Ideally, you’re entering the process on the premise that the vendor will be your long-term partner offering solutions that drive performance and competitive advantage. This means the single objective of negotiation is a win-win relationship.
Before you announce your intentions, clearly define your requirements and scope. Be very specific to avoid the need for eternal change requests or worse, being told this was outside your scope.
Next, determine the elements of negotiation, your goals and limits. Setting limits before you negotiate will allow you to make rapid decisions during the process, giving you strength and confidence, as well as pleasing the vendor. Negotiation is about options, so have alternatives whenever possible.
Define your budget in terms of current and future licence requirements, implementation, and support and maintenance. Be realistic as there is nothing more frustrating than realising you’ve underestimated the true cost of the product. It’s also a known fact that the larger your budget, the greater the influence you have.
From a functional perspective, rank and categorise your requirements in terms of needs and wants. With respect to service levels, identify the absolute minimum you require to effectively support the product. Include your training and consulting needs as this is an area where the vendor can be quite generous. When looking at warranties, focus on the critical functions of the product and services. Finally, all warranties should have a remedy. Without this, the vendor faces no consequences should a problem occur.
You also need an idea on what’s most important to you, functionality, service or price, and what you’re willing to contra. Also, make a list of what you’re prepared to offer the vendor. These include: reference site, beta test site, user group participation, case studies, testimonials and use of logos. Vendors will typically do what they can to make their clients happy, especially when they have access to a client who will tell a great story.
You are now ready to meet. Ensure you are negotiating with the right person and offer the vendor the same. The last thing anyone wants to hear is ‘I need to speak to my boss’. Perhaps the most critical element in this process is effective communication. Be clear in your position, listen carefully, and ensure the listener understands your message whilst maintaining emotional control. Egos should be left outside and never make or react to threats or intimidation. Silence is not a bad thing, get comfortable with it.
Finally, both parties will mark up documents for quick reference and review. Ensure you use appropriate software that automatically captures changes, additions and deletions as revisions. Identifying the differences between the original contract and the revised contract will ensure there are no delays or frustrations.
Remembering the win-win objective and recognising the value in the relationship will result in better vendor negotiations with successful outcomes and reduced risk.
About the author Ari Kopoulos is national sales and marketing manager for EmployeeConnect. For more information, visit www.employeeconnect.com