LearningCenter Post98

Guide to Negotiating Software Contracts

Having your eye on a new piece of software is one thing but setting up a contract in which both you and the vendor walk away happy is another thing entirely. What sort of steps can you take to ensure that your contract negotiation leaves you with the best possible deal? After many years of software contract negotiations experience, at MetrixData360, we have come up with a few tips that we find improve your chances of a successful outcome. Below is our guide to negotiating software contracts.

Be Prepared 

In Mark Bartrick’s article Forrester: Tips for software contract negotiation, he points out how you should already know what you want to buy long before you’ve sat down with the vendor to negotiate a contract. You should have a clear outline of what you will need, the purpose this software will serve in your company’s environment(s) and when you need to purchase and implement it. Gather information about your potential vendor, read reviews on the system you are thinking of getting and organize how you plan to monitor the software’s usage and your compliancy. Preparation is important in any element of life, and contract negotiation is no exception.

Break It Down Into Parts And Figure Out What You Need

Will you need maintenance and customer support, or do you already have an internalized system in place? Does the NDA in the contract outline the procedures for protecting your data? NDA’s will not always include this procedure, but it should.

Being confronted with a thick contract proposal, it can be easy to skip over some critical details, but it is important that you do your due diligence and closely examine any proposed contract the vendor has proposed. Take it section by section and verify if these features are something you need or if they can be configured differently to better match your unique profile. It is also important that you do not let a unique detail derail you, don’t fixate on any singular point while ignoring others.

Have Your Own Contract Proposal Laid Out

As Forbes points out in their article: 15 Tactics For Successful Business Negotiations, just like in almost any type of deal, it is important that you come to the table with a clear outline of your own expectations, have your own proposal ready that lays out key components that you want incorporated into your deal.

Keep in mind how much your vendor will gain from your business and because of this, they will be reluctant to drastically change your offer after you’ve clearly laid it out before them. There are always other vendors with different products that can equally suit your needs.

Take Control During The Negotiations  

You don’t want your vendor to push you around, as Richard Stim brings attention to in his article Contract Negotiation: 11 Strategies, not during the negotiations, nor any point afterwards. Make sure you are perfectly clear about your software requirements and don’t let the vendor try and bend you into a bargain that is not suited for you because by giving into their terms and conditions now means that the vendor can expect such behavior again in the future. This is the beginning of what is hopefully a mutually beneficial relationship, after all.

Talk To All Internal Stakeholders  

Mark Bartrick lays out in his article, Forrester: Tips for software contract negotiation, that communication is always key, so you will want to make sure that your stakeholders and the members of your financial and IT departments are on all the same page with the proposed software.

If you have chosen to add any lawyers or software consultants to your team, make sure they are in the loop throughout the negotiation process. They are the experts and will know just how much and how little you should say.

Questions Rather Than Demands 

Using Richard Stim’s article: Contract Negotiation: 11 Strategies as reference again, when conducting negotiations, it’s important to approach this topic with an inquisitive, rather than aggressive tone. Do your due diligence and make sure you have firm understanding on the product you are buying; it is important to make inquiries. Questions educate but they also open a discussion between yourself and the software publisher. Especially when you are just beginning a relationship with them, it is necessary to make sure that both of you are on the same page.

Get Help From Advisors And Lawyers 

Program on Negotiation (PON) by Harvard Law School ’s 10 Hard-Bargaining Tactics to Watch Out for in a Negotiation suggests it’s important that you gather the relevant support you need to help you throughout this process. Get the right people involved as needed, whether that be your IT department, your legal team, your finance team or third-party software consultants. Leveraging others’ input make a big difference in helping you make an informed decision with your contract.

I want to know more about Software Consultant Pricing 

Getting the negotiations with a software vendor right will mean a lot for your company. In addition to reasonable rates in your purchase requirements, an effective vendor relationship will go a long way in ensuring your understanding of your compliance position going forward.  Taking the time and following these steps will help you come away from negotiations feeling confident in your decisions and optimistic for future requirements.

Metrixdata360 has decades of experience in managing our clients’ software licenses and contract requirements and we know where and how to improve your stance during the negotiation process. If you’d like to know more about contract negotiation strategies, please visit our learning center. And should you have a contract renewal looming soon, we’d suggest reviewing Tips for a Successful Software Contract Renewal Negotiation.Don’t hesitate to give us a call to learn more!

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