Success Tip Conduct Negotiation

Effective negotiation requires extensive preparation before the event. It requires knowing as much as possible about the vendor, such as its history with other clients; the vendor's market size and growth; its financial condition; its management stability; and its reputation. It also requires that the selecting firm knowing something about itself, including its strengths and weaknesses, short- and long-term goals, and technological capabilities. Such information about the firm and the vendor enables development of a negotiation strategy that has win-win results.

During negotiation, it is important that all team members support the strategy. It is also important that one person be the primary negotiator. If the vendor senses the opposite, then the negotiation may not have the desired results.

While negotiating, it is also important to recognize trends in IT outsourcing, including:

■ Keeping the duration for contracts within two to three years

■ Reserving the right to review and perhaps even approve subcontractors

■ Focusing on a specific, narrow set of services

■ Describing circumstances for renegotiation and termination

■ Requiring technology transfer

■ Describing minimum service levels

■ Providing for penalties, damages, and incentives

■ Listing reporting requirements

■ Providing governance procedures

When forming the negotiating team, the organization should be sure to:

■ Determine the required knowledge and skills (e.g., legal, technical, business management)

■ Designate a project manager

■ Determine whom to select from the evaluation team

When developing a negotiation strategy, the organization should be sure to:

■ Determine the overall goals to achieve

■ Develop an in-depth knowledge and understanding of the vendor's style, goals, and history

■ Come prepared with facts and data to support the case

■ Conduct a worst/best case scenario analysis

When negotiating, the organization should be sure to:

■ Have a primary negotiator

■ Seek a win-win solution

■ Have the consensus of all members of the negotiation team

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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