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A Means to an End

A Means to an End

What negotiation looks like when the players involved strive to make the deal work in practice — not just on paper

When the negotiating team for international law firm Mallesons Stephen Jaques began bargaining for a new data centre four years ago, almost no one in the industry was anticipating that the cost of cooling and energy in co-location centres was set to skyrocket.

"That was something that was just not on people's radar," says executive director business integration & technology Gerard Neiditsch. "And the reason it wasn't on any radar was that the contract was for three years so within that three-year horizon, rightly this was not a huge issue."

As it turns out, the cost of relocation and the disruption potential proved to be so high it would have been far preferable to stay in the data centre rather than to move. "In the end, because neither we nor the provider really thought that through, the provider wanted to more than double the cost of space in their data centre at the end of that period," he says.

The lesson for Neiditsch was that the contract time horizon can be different to the real commercial time horizon. The canny negotiator therefore keeps their eye firmly on the future, with most attention during negotiations on the endpoint of the negotiations rather than the beginning.

Likewise News Digital Careers CIO Simon Smith was working in operations as a database administrator some years ago, but kept getting pushback on certain things he was asking for from the supplier of services and couldn't work out why. It was only when he learned that the deal had been rushed through so it could be signed by the end of the financial year and that no one on either side had thought beyond the contract's signing that he began to understand why.

"It was like the sales guys clapped their hands and said 'thank you' and then threw it all over to operations to sort the details out. It caused a lot of problems because when it came down to it, services went down and everyone was pointing fingers. Nothing got resolved because there was no clear escalation path, there was no clear statement of who the responsible parties were, and so on, and so on. I have seen this kind of thing throughout my career," he says.

Sadly, such short-term thinking still dogs all too many negotiations, according to Vantage Partner's founders Danny Ertel and Mark Gordon, co-authors of The Point of the Deal: How to Negotiate When Yes is Not Enough from Harvard Business School Press. The authors point out what too many overlook or forget: that in most instances, the point of the deal is not just to sign a contract, but to then work together to implement the deal and create some sort of value. Keeping that in mind during the negotiation makes it a lot more likely the deal you sign will be worth doing, they say.

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More about Financial InstitutionsForrester ResearchHarvard Business SchoolMallesons Stephen JaquesMilestoneNICEOraclePLUSPromiseSAP AustraliaVantage Partners

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