Do you have any idea what you're committing to?
According to HfS analyst Esteban Herrera, he’s seen weeping, object-throwing, suicide threats, uncontrollable roll-on-the-floor laughter, walk-outs both staged and unplanned, and even a handstand.
So let’s hear more from Esteban about about that strange place – the negotiation table…
As an outsourcing advisor for about a decade, my favorite part of any deal was the negotiations phase. Now, I realize that for many of you, that sounds like a serious illness, but it was, without a doubt, where I had the greatest impact in building a healthy relationship between two enterprises that would actually last. I’ve had the opportunity to work with some great attorneys, colleagues, clients and providers. I’ve also worked with some that would not be accurately described by the last sentence. With triple-digit deal negotiations behind me, I’ve learned a few tricks of the trade, including how to manage my famously fiery temper!
There are hundreds of great books on negotiating theory and practice, and HfS is not here to rewrite any of them, but we can shed some light on how to apply these tactics successfully in an outsourcing negotiation. A big part of it comes from saying what you mean, but it also requires accepting that buying outsourcing is not like buying a car, or toilet paper, and that your experience at the local Chevy store or purchasing MRO may not give you enough to be successful.
Negotiations need not be miserable:
- I once negotiated an applications deal in a day and a half. There were five people in the room. The entire contract including all exhibits was less than 100 pages. That relationship is in its fifth year, has been renewed, and is working out great by both parties’ accounts.
- I may be the only advisor to ever agree to help clients negotiate on a fixed price basis. It can and has been done, and it aligns your interests with the advisors very well.
Esteban Herrera, SVP Enterprise Sourcing Research
That said, I do believe most enterprises undervalue the importance of expert advice at the negotiating table—the people on the other side of the table do this for a living, whereas even the most outsourcing-leveraged enterprise doesn’t negotiate much more than a deal or two per year.
Overall, we’ve made contracts and process to get to them more complicated than they need to be. I once showed an astute client who had been living in a hellish ITO relationship for almost five years the thousands of pages of wonderful artifacts my firm would produce. He said “I had those last time, and look where it got me!” He made an excellent point—it’s not the detail in the agreement that will make a relationship tick—it’s the commitment and the individuals who live it every day. HfS Research is committed to helping our clients conduct simple, productive, relatively painless negotiations.
To read our Best Practice report on Real World Negotiations, click here. And feel free to share your war stories too!
