What CIOs Must Know to Negotiate Better Deals - ' 3 Ways to Avoid '
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3 Ways to Avoid a Bad Deal
1. Determine What the Vendor Needs From You
Outsourcing vendors and alliance partners typically have models for achieving their client's objectives. But there's always a tradeoff. For example, if the company wants labor arbitrage, the CIO needs to ensure that offshoring is on the table, and that knowledge transfer will take place effectively. But above all, the CIO needs to know how he/she will be involved in it.
"The CIO really needs to understand how the vendor will accomplish value, and what it requires of the customer," Ertel says.
2. Make Governance a Top Priority
CIOs and their deputies shouldn't look to micromanage their service providers, but they do need to ensure that the vendor is held accountable for its responsibilities. Too often, though, governance and responsibilities are left out of the up-front negotiations. Establishing those details take minimal time, but vendors tend to push the same policies they've used in previous deals.
"You need to bring the governance discussion earlier into the process, and not just cut and paste from the last deal," Ertel says.
3. Establish Stakeholder Expectations Early
In these deals, bringing in internal constituents is just as important as dealing with external partners. In turn, the CIO needs to open the discussion to include employees—especially those who will be involved—to get their input before the deal is done. That brings more ideas to the fray, and usually leads to better buy-in for the project.
"The CIO needs to sharpen his or her consultation skills, and involve people in a way that they get heard, without giving them a veto," Ertel says. "A lot of these deals leave stakeholders out of the equation for the expediency of getting the deal done."
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