Best Practices: A Work Plan To Successfully Negotiating Software Contracts (Part 2 of 2)

March 12, 2004

In the last post we talked about 7 strategies to plan a software contract negotiation:

  1. Ensure that the right team is in place
  2. Identify the organization's key business drivers
  3. Determine the product adoption plan
  4. Consider contract strategy implications of the software ownership life cycle
  5. Align contract strategy with product adoption
  6. Identify leverage points
  7. Prioritize key contract objectives

So building on Steps 1 to 4, here are the Steps 5 to 7...
Step 5: Align contract strategy with product adoption

  • Inputs:  Step 4 red lined contracts with suggested improvements.  Pricing comparison spreadsheet.  Cost savings opportunity calculator.
  • Action items: Rank suggested terms and conditions improvements list against product adoption plans.  Compare term and conditions against best practices.  Identify flex up/ flex down provisions for user based and usage based licenses.
  • Deliverables: Prioritized list of negotiation points for terms and conditions.  Target objective for user based and usage based license costs.

Step 6: Identify the leverage points

  • Inputs:   Prioritized list of negotiation points for terms and conditions.  Target objective for user based and usage based license costs.
  • Action items: Determine vendor's current financial position.  Review last 10 deals for key concessions
  • Deliverables: List of leverage points.

Step 7: Prioritize the key contract objectives

  • Inputs:   Leverage points from Step 6.  Current order documents.  Current offers.
  • Action items: Agree on key objectives.
  • Deliverables: Final objectives list.  Finalized negotiations strategy

Hope this helps put it all into context!
Contact me at rwjhu@yahoo.com if you need any assistance in your contract negotiation.  We provide fixed fee pricing, retainer models, or gain sharing for Baan, JD Edwards, Lawson, Microsoft Great Plains, Oracle, Peopelsoft, SAP, And Siebel contracts.  Just ask!
Copyright © 2004 R "Ray" Wang. All rights reserved.

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