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Contracts, Negotiations & Customer Choice

July 31, 2013

When it comes to selecting a supplier, how important are the terms and conditions? Does it matter what approach the supplier takes to negotiation? Does ‘the contract’ really make much difference?

The answer to these questions varies. To some extent, it depends on the attitudes and policies of the customer organization. Perhaps more important is the nature of the deal or transaction. IACCM is running a number of studies that will look at questions like these from the perspective of both buyers and sellers. In addition, these studies will compare the approach of major companies within an industry, to identify the extent to which their approach may be a significant source of competitive advantage (or disadvantage).

The first study looks at major outsourcing and IT services providers. Many customers in this sector express concern over the inflexibility that suppliers show towards negotiation, with almost half frustrated by the lack of authority in the supplier’s negotiating team. In fact, it is the issue of responsiveness, closely followed by a feeling of being treated ‘as a business partner’, that customers most value when distinguishing between supplier approaches to negotiation.

When it comes to terms and conditions, data protection has risen to the top of the ‘critical’ list. Over 70% indicate that this is an are where suppliers must satisfy customer needs, with service levels taking second place among the most important terms.

The survey remains open for completion by anyone who has direct experience of negotiating with major outsourcing or IT service providers. It can be accessed here.

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