Making a Deal: Negotiating in the Technology Field

By Dean Kaplan, CEO and President, The Kaplan Group

Generally speaking, c-suite executives are experienced negotiators. They’re familiar with negotiating new hires, real estate deals and sales contracts. But technology puts many executives in the uncomfortable position of negotiating in a field about which they feel insecure and uninformed. From dealing with potential patent infringement to negotiating the purchase of a companywide network, or negotiating a better deal with a software supplier, technology negotiations are now part of life for people who may have limited or no technology background.

Although skills like research, empathy, active listening, inquiry and problem-solving are essential to any negotiation, negotiation in the technology space requires an acceptance and understanding of additional elements.

The Knowledge Gap

Purchasing, leasing or licensing new software may require a level of information and knowledge that is simply unreasonable to expect a purchasing or operating officer to have. If the buyer and the seller both assume that everyone at the table has the same information and is speaking the same language, it can create costly mistakes. We’ve worked on numerous collection cases where a purchaser stopped paying on a SaaS contract claiming that the software did not work, when in fact, the service simply did not work the way the purchaser expected. We’ve also seen cases where a company unknowingly violated a licensing agreement and refused to pay the appropriate fines. These mistakes don’t just affect the buyer, they can cost the provider time, money and reputation as well. As a provider, taking steps to ensure that your customers understand the system is not only the right thing to do, it can be a helpful negotiation tactic as it builds a sense of trust.

Hidden Costs

When negotiating a new contract related to technology, buyers need to be aware of all the financial costs that may affect their business, but not the seller. For example, buyers are often unaware of how a new software or service can affect their staffing. A new system purchase could involve either a reduced need for staff overall or of specific staff members. Or, the new purchase could mean that additional staff with a different skillset is needed. A new system could also involve the need for new virtual, or actual, storage or equipment. When purchasers are unaware of the entire costs of a system they put their organization and employees at risk.

If you’re involved in technology negotiations for which you feel ill-equipped there are steps you can take to prevent costly mistakes. The most obvious is involve staff at all levels in helping you research and understand the technology you’re discussing. Don’t be bound by traditional views of who is and isn’t a decision maker. If you’re buying a new system that includes phones, include the receptionist in conversations.

Often in negotiations people are afraid to ask questions, assuming that doing so will make them appear weak. When discussing technology asking the right questions will actually help you negotiate from a place of strength.

Living with Uncertainty

Many c-suite executives are uncomfortable with, or unaware of, the level of uncertainty involved in technology. It’s true that when you negotiate a rental agreement you don’t know for sure if the space will still be appropriate in a year. But, that’s a different level of uncertainty than not knowing if a brand-new highly complex system will operate as promised, or if within a month of purchase a newer technology will come along making your system obsolete. Even the people with whom you’re negotiating may not be able to answer those questions. Two highly qualified engineers can give completely different projections for the same project.

It’s important not to get caught up in competitions to see who has the better guess at the future. Instead, create contracts and proposals that include clear benchmarks, exit plans and contingency plans. Making sure that all assumptions are included in writing is paramount for both negotiating parties.

Internal Negotiations

Even within a company, technology can make what used to be straightforward decisions more complicated. Different departments may have a variety of preferences when it comes to purchasing or leasing equipment or licensing software. As technology causes shifts to people’s jobs, the everyday negotiations that people do in a business environment can become more difficult. Specialization may mean that managers are left supervising jobs about which they know very little, and that can cause tension in salary negotiations.

For any internal decision, a clear chain of command and a culture of trust, empathy and listening can go a long way toward making internal negotiations smoother.

Many people believe that you are either a great negotiator or not. In fact, like any skillset, negotiation skills need to be learned, developed and strengthened over time. Although technology can add different levels of complexity and difficulty to negotiations, strong negotiators will work to improve and increase their skills.

Dean Kaplan is president of The Kaplan Group, a commercial collection agency specializing in large claims and international transactions. He is an expert in the technology industry and has 35 years of manufacturing, international business leadership and customer service experience. Today, he provides business planning, training and consultation to a variety of global companies.

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