This is my first column of the new year. For you, this just might be the first year in several during which your company makes some major technology investments. Maybe it's pent-up demand for new technology or whatever, but with technology expenditures having been down for so many years, this may your year to buy. It could be customized software, a major upgrade to your website, or some other technology purchase but whatever it is, here are some tips that can help you insure that you get the most for your money.
Vendor Forms
You should always assume that a form contract is completely negotiable. While this may not always be true for small deals, once you're spending real money, you should presume that the form they've presented you is merely their first offer.
The typical scenario is that their sales folks talk to you about a few high level points. They'll tell you what they can create, how wonderful it will be, how it will pay for itself before you've even paid them, and on and on it goes. The "details" that get discussed are often not much deeper than price, delivery date and functionality.
Then comes this monster agreement filled with details nobody discussed. It never ceases to amaze me how even sophisticated business folks treat that document with reverence. It's nothing more than their lawyer's one-sided take on what the deal should be.
As someone who drafts these contracts for vendors, trust me when I tell you that I write them assuming that they'll be some push back from the other side. If you don't push back, well, let's just say that you're making a big mistake. Furthermore, if you don't get help from a lawyer with lots of legitimate experience doing these types of deals, you're at a tactical disadvantage and you will end up on the losing end of this negotiation.
The Basic Business Points
At some level, the agreement should correctly and clearly state the business points that you actually discussed with them. Is the price as discussed? Did the understanding on features make its way from the salesperson's mouth to your contract? If not, don't expect the features because when it's not there, "But the salesperson said so," will be a losing plea.
It's so elementary, but you must be sure that everything you were promised makes its way to the contract. Don't be so foolish as to accept, "Don't worry. The contract is just a formality. We'll do it like we promised." Of course, it's that sort of foolishness that keeps my litigation plate full.
The Undiscussed Part
Before the first draft of the contract appears, few business people fully discuss issues like limitations of liability, warranty, indemnification and other similar issues. Business folks tend to relegate these and similar issues to the world of "lawyer's points." You can label them whatever you want, but they are important. Get it wrong on some of the "lawyer points" and you may find yourself without a meaningful remedy if your deal doesn't pan out as you might have hoped.
Not surprisingly, most form contracts presented by vendors have a vendor-favorable take on these "lawyer points." You can always do better if you take the time to professionally negotiate your deal.
It's your money. Why should you be promised the world by a salesperson, but your agreement says that you accept whatever it is they deliver to you "as is." That's not a warranty folks. Why is it that the agreement limits their liability to you in case of a dispute to whatever it is you paid them. In plain English that means that no matter what they do to you and no matter how bad it is, the most you get is a refund. Moreover, why is it that they get a limitation of liability, but you don't?
A typical vendor provided form agreement has pages and pages of one-sided protection for the vendor. I'll typically negotiate to either remove these provisions or make them apply to both parties. The old cliché should apply. What's good for the goose, is good for the gander.
It Takes Time
One of the things vendors count on during negotiations is the buyer is more anxious to consummate the deal than they are. Car dealers depend on the same thing to put you at a disadvantage during negations. Don't fall into the trap.
You must clearly communicate to your vendor that you're not in a rush to sign anything. You'll sign when the contract is right and not one minute before. Just that small bit of posturing can help level the playing field.
Any smart negotiator will use time against you if he can. Don't fall victim to it.
Then you need to manage your own expectations. Technology deals simply take time to properly document in a contract. The deals tend to be complex and there is no magical one-size fits all form.