#8 – How to Control Technology Procurement Outcomes | Part 1
Many aspects of business technology can be boiled down to a matter of science. Defining specifications, executing technology migrations, and testing features are all repeatable functions with controllable variables, and observable, measurable results. Even troubleshooting is a matter of scientifically (and painstakingly) testing changes to variables, one at a time, and measuring the results until the desired outcome is achieved. There is, however, one area of business technology that most would agree does not fall under the term “scientific”: procuring and negotiating contracts. Regardless of whether or not you have a formal RFP process, it is often at this point in the shopping experience that customers begin to feel like they’ve lost control, and are now at the mercy of salespeople or a process that hinders an optimized outcome or experience.
Without knowing what the provider has up their sleeve and in their hat, many people feel relegated to playing games so they can get facts without giving away leverage. These activities are also often seen to be heavily inter-personal and relationally based, considered by many to be more a matter of art than science. While that’s not an unfair statement to make, neither is it unreasonable to suggest that there is, in fact, a way to standardize your evaluation, procurement, and contract negotiation activities, giving you a clear path to staying in control of your technology purchases. The following segments will cover the 5 steps you need to know to negotiate the lowest possible price for your technology service and contracts you need.
Part 1 – Define your Own Needs
The very first and most important component to staying in control of your shopping experience is taking the time to define for yourself what it is you’re shopping for. Just as you wouldn’t jump in the car and start driving to a place you’ve never been to before, so must you also define the road map for your purchase before you begin shopping. This doesn’t have to be a particularly complex map, but it does need to clearly define the destination. In order to do that, we need to understand what it is you’re trying to accomplish, how technology can best serve that objective, how you will be purchasing this technology, and then your actual technical requirements.
We like to start with the goal in mind, so we begin with the question: What outcomes are you trying to achieve? Specifically, which KPIs need to improve? Can you apply a specific technology to drive those KPIs? Are we increasing customer satisfaction by introducing skills-based routing via a cloud contact center? Are we reducing time to open new stores by standardizing our WAN technology on a layer independent of the circuits? Are we just focused on reducing operational expenses? If you haven’t tied your IT budget to your KPIs, then you’re missing the easiest way to quantify the value and priority of your technology purchases.
Once we know what we’re trying to achieve, and which technology will get us there, we need to make sure that all stakeholders are in agreement that this technology is viable, and they will support the shopping process. The goal here is for all stakeholders to weigh in and decide who will act as the decision maker for the entire organization. Whether your organization works more like a collaborative team, a democracy, or monarchy, the decision maker will be the person in control of this process, so all stakeholders need to be aligned on who will represent them. The second objective of stakeholder alignment is clarifying whether this purchase will be a single tactical step or a strategic position. Different organizations will define these differently, but they will have the same impact: tactical purchases are much simpler, often commodity-focused and transactional, while strategic selections will introduce complexities in choices that require a deeper clarity of business process. Tactical steps tend to be quicker and more standardized experiences. While strategic initiatives will have a longer implementation time and require much more customization, the other side of this coin is a deeper and much more meaningful improvement to business.
Also as a part of deciding who will represent you, you’ll want to consider how you will engage with various suppliers to make your purchase. Just like when buying a house or other major purchase, a percentage of what you purchase will be paid as a commission to the person who represents you as your Agent. Also like when buying a house, you have the ultimate say in who represents you as your Agent. And still like when buying a house, there are reasons to be deliberate about where those commission dollars are going. Many people consider calling the providers directly and asking them to submit their recommendations. This leaves the burden of evaluation in your lap, while also subjecting you to the “dog and pony show” of a salesperson who only has one pony. This is similar to asking the real estate agent who is selling a house to be the one who represents you in its purchase. Many people consider using sales brokers, who can bring multiple providers to the table, and show you the lowest monthly rates. However, they are often times so focused on rate that they don’t even address the other areas of your true cost, and they’re going to be hands-off with your installation and support, even though they’re continuing to pocket commission dollars every month you keep your service. When deciding on your procurement channel, we think it is prudent that you select an agent who will use the funding of the commission dollars to their fullest value. Not only help you evaluate your choices through an objective and methodical process, but to also potentially help you implement and support the solutions you choose over time.
The next step is where we roll up our sleeves and begin to do some of the heavy lifting. This is why it’s important to have first chosen your procurement channel. If you’ve selected an agent who will apply future commission dollars to help you evaluate, you don’t have to worry about many of the coming details. If you’re more of a hands-on type of person, or you want to be able to test potential representatives for the maturity/effectiveness of their approach, then it’s time for us to define the specification.
