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I’ll tell you what I want ….

December 31, 2013

Negotiation can be a frustrating process, a game of discovery. Many suppliers feel that gathering true customer requirements is a bit like playing hide and seek. But what is it that suppliers could do better?

Earlier this year, IACCM ran a survey exploring the experiences of buyers of IT services and outsourcing. These are the types of deals where negotiation is often extensive and prolonged, so an excellent place to explore both how suppliers behave and how customers would like them to behave. The study looked at generic values, but also investigated the specific performance of nine major suppliers.

The major IT service and outsourcing providers are sophisticated in their approach to negotiation. Most of them have well defined processes which ensure good response times. They are generally mature in their industry knowledge and expertise. Where they mostly fail – and frustrate their customers – is in the extent of flexibility and the levels of authority provided to their negotiators. This is exacerbated by challenges in understanding their contract terms or positions and the apparent inability of many supplier negotiation teams to provide adequate or speedy clarification on key issues.

The IACCM study gathered not only generic industry input, but also client experiences with individual suppliers. It revealed significant variations in the quality of their negotiation process and also that many of them struggle to offer a consistent customer experience – in other words, the quality of the negotiation depends on the specific team or, in many cases, the status or geographic region of the customer.

So what is it that customers really, really want? To gain advantage in negotiations, suppliers should focus on the characteristics that customers most value. These are:

  1. Responsiveness
  2. Treating the client like a business partner
  3. Efficiency in quickly closing out issues
  4. Providing interfaces with the power to make final decisions
  5. Ensuring a fair and equitable process

Many of the positive – and adverse – comments made by clients relate to the extent of openness, transparency and the sense of honesty. So while responding to customer issues in a timely manner is important, it is the credibility and thoroughness of those responses that really matters. And when it comes to terms and conditions, many account teams are lacking in both the knowledge to explain or the power to amend. Rectifying this situation would be a worthwhile objective for many major suppliers. Even if there are good reasons to restrict power to negotiate, we might at least increase the knowledge and understanding of client interfaces to explain why we take the position we do.

[1] The companies covered are Accenture, CSC, CapGemini, Fujitsu, Genpact, Hewlett-Packard, IBM, Infosys and Wipro

  1. Dave Barton permalink

    The part about intentionally restricting power to negotiate reminds me of the saying “if you cannot give a concession at least give an explanation” — Dave

    • I do also “enjoy” those situations when somebody refuses to trade any feasible concessions simply because “…such things were never done/accepted before by our Company X…”..and again without being able to at least identify any rationale behind.

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