Saying “I Do” to a vendor? Not without a pre-nup!
Throughout my career, I have negotiated hundreds of IT service contracts; many of which were for Cloud and SaaS services. I’ve also born witness to all the things that can go wrong when businesses fail to engage in the contract negotiation process. You may be asking, “How does one fail to engage in the negotiation process?” Because there is more to the contract negotiations process than:
- Getting the best pricing
- Clicking “I Accept” on a web page
When you entrust your business services to a 3rd party, you are entering into a long-term relationship, much like getting married. And, like all relationships, no matter how “In Love” you are standing at the altar, there will be good days and bad days.
That contract is your pre-nup. It is how you set forth the rules of engagement, how you manage conflict, disagreement, rewards, and punishment. And like the pre-nup, the operative word is “Pre.” This is your first, best, and sometimes last chance to make sure your business interests are captured. When things go south, I promise you that your C-Level suite will not care when you say…
I didn’t understand…
I didn’t know…
I assumed that….
Risk & Compliance, ITIL, and Vendor Management are inextricably linked
If you’re in IT Service Management, Vendor Management needs to be one of the sharpest tools in your tool belt. You can start your journey with effective contract negotiations. The template included with this blog covers negotiations on the following topic areas:
- Support
- SLA’s, Metrics, and Reporting
- Terms of use
- Adding and Removing Services
- Data Privacy & Data Handling
- Security
Key points to remember when going through the check list:
- Understand your business rules – What are your business and legal requirements and how do they compare to the language in the contract? Analyze and close the gap.
- Understand the answers – Ask all the questions on the checklist and understand all the answers. The answer may not need to be reflected in the contract, but it may be required to define your services and/or set expectations with your business consumers.
- Document vendor responses in the contract – If a response is something you need to hold a vendor accountable to (see bullets above) then it better show up in the contract language. Don’t fall for the “it’s implied” or “I give you my word” trap. People come and go, if it’s not in the contract, it doesn’t exist.
Final words. Never, ever fall for the “We don’t negotiate our terms,” play. Vendors will try to pressure you with tactics like “We do business with [Name your Fortune 500 Company here] and they didn’t negotiate the terms.” If this happens I usually just laugh and reply: “Well then, their procurement and legal folks acted irresponsibly and I intend to serve my business better.”
Enjoy the check list and happy negotiating.
More Vendor Management resources:
- Good Cloud Gone Bad: Essentials for governing the Cloud
- Understanding Software-as-a-service and Cloud SLAs
- Software-as-a-Service, Cloud Services Risk Assessment
