Informed Choices

Another valuable lesson is to read existing contracts carefully. I am aware now of a situation where a contract I had -personally negotiated came up for renewal years later, when I was no longer employed at the firm. The procurement department had not read the contract properly and had not realised there was a clause in the contract allowing the -renewal to take place at a nominal cost when the contract term expired.

The vendor was aware that procurement staff had moved around since the original deal and tried asking for a couple of million dollars as a renewal fee. The salesman who related the story to me was acutely aware of the renewal clause and was dreading a call right up to the day of the contract. But the call never came, and the vendor was two million -dollars richer for doing nothing at all.

It should be said that not everything is about price. If you are in a very strong position and squeeze the vendor mercilessly, then you may win the battle but you'll lose the war. You are the one that is going to implement the software. And if the vendor feels aggrieved, it will likely be a lot less helpful when it comes to sorting out problems on your project than if it feels it was treated fairly. This is particularly the case with smaller vendors, for whom your deal may be very significant. With the larger players, though, it can be seen from the net margins of these companies that there is usually some scope for negotiation.

Buying software is a dark art, so arming yourself with as much information as possible will put you in a better bargaining position. Then, ensure genuine open competition to get a fair deal.