Focus On Contract Performance, Not Protection

Most contract negotiators – at least the good ones – understand their company’s capabilities and seek to structure deals in a way that optimizes benefits for both sides.

But in every deal there are moments when the negotiator knows that they cannot meet the needs of the customer and they are forced to push back and to limit the commitments they make.

In many organizations, that is where the story ends. The deal either gets done or falls apart. There may be some level of post-mortem, but in many cases the unsatisfield issues are forgotten and rarely do they get consolidated to see whether similar problems are being encountered on a regular basis.

In my last blog, Managing Risk Collaboratively, I suggested that smart suppliers would increasingly seek to reduce sources of contention with their customers by proactively addressing their concerns. And according to an article in Channel Insider, that is exactly what IBM are doing through two recent acquisitions. The article observes: “The willingness to invest during tough economic times is smart business and provides a lesson for the broader channel. But you must invest in the right places for the commitment of dollars and resources to make sense. IBM’s two acquisitions make sense because they map directly to hot spots in the market today”.

Importantly for our community, they also suggest that IBM will establish new capabilities that will assist contract performance and in particular address two key areas of supply risk management.

The acquisition of SPSS, according to Channel Insider, results in a new capability in predictive analytics, which “provides foresight that allows customers to operate their businesses more efficiently with spot-on information about behaviors, patterns and trends. Those capabilities add up to cost-savings, more accurate resource allocation, faster ROI and the ability to one-up the competition”.  For IBM, this potentially represents far greater effectiveness in its own predictive capabilities, both in customer selection and in the quality of post-award contract and relationship management.

The other acquisition tackles another critical area of supply risk that often arises during negotiations – data security. ‘The Ounce Labs acquisition is notable because it addresses what the industry has talked about for ages as part of the overall security discussion: securing data at the application level. Testing and remediating data security problems during the software development phase, which Ounce’s tools enable you to do, saves money and avoids more serious security implications that could arise once an application is deployed.”

These are two examples of areas where IBM negotiators of the future should be able to demonstrate increased capabilities and where post-award relationships should be improved by proactive identification of problems and their resolution.

As recent interviews with IBM have illustrated, the Contracts organization is closely involved with acquisitions and will therefore be well aware of the potential improvements in contract management that are offered by these two additions to the IBM product portfolio. Rather than fighting customers, they offer further opportunities for collaboration and added value.