As if it wasn’t hard enough! Gartner recently issued a piece of research to their customers on how to deal with ‘rogue’ vendors. The title of the piece is Top 10 Extreme Negotiation Tactics for Problematic Vendors. I don’t really know where to start with this. While the piece begins with “Some vendors will simply not assist customers in lowering IT costs …”, the concern that I have is that all vendors will be painted with the same brush, and subjected to the same recommended tactics of “aggressive negotiating stances … using more assertive methods … [to] achieve the lowest possible price.”
In my experience, it’s rare that a primary focus on ‘the lowest possible price’ is in the best interest of either customer or vendor (and I dislike that term vendor). I would surmise that most of the members of this network understand that most value is added to a customer when a supplier has the opportunity to fully consider the customer’s business drivers and related business initiatives before offering a solution to support the customer’s pursuit of such drivers and initiatives. Furthermore, the value delivered by quality suppliers usually goes beyond the sale and is manifest in many ways when the supplier can act as a trusted advisor to its customers – before, during and after the sale.
However, suppliers are businesses in just the same way as their customers are commercial enterprises. When margins are squeezed to minuscule levels, it’s hard for even the most supportive supplier to add much value during the sale, or once the sale is completed. Now, I’m sure it’s not Gartner’s intention to recommend to their clients that all ‘vendors’ should be treated this way; but it strengthens the procurement officer’s position relative to the business sponsor, and that’s usually not a good thing for either the supplier or customer. I don’t know what opinions you might have on this matter – I’d like to hear them – but in any case I thought you’d like to know the tactics that are being recommended. Here’s the Top 10 List! (The comments in parentheses are mine.)
- Simply walk away
- Drive to commoditized pricing (Ouch!)
- Cancel Contracts to Alter the Vendor Relationship
- Reset the Rules for RFPs
- Give Nothing Away for Free During Contract Negotiations (Fair Enough)
- Keep Options Open for Reducing the Project Budget (Always fair – as long as volume pricing changes apply)
- Switch Roles in Your Negotiating Team
- Propose/Review/Adopt Alternative Delivery Methods
- Play Negative Factors for a Positive Outcome
- Threaten to/Actually Delay Project/Purchase
Over to you!