Performance Controller

"However beautiful the strategy, you should occasionally look at the results"...WC Print

I want to share with you a recent experience I had negotiating a contract. During this process it struck me that even though we know there are no fairy godmothers, we still believe they will take care of us.

As a budding recruit learning the commercial ropes, my boss had once warned me about taking that approach.

You can lose your shirt if you don’t get your pricing right. But you will lose your business if you compromise on your terms and conditions.

Don’t take shortcuts on conditions as there are no such things as fairy godmothers to bail you out.

Recently at work we concluded negotiations on a deal. From the get go we thought we had covered the sales cycle well, first qualifying our prospect to make sure our lead was a genuine with substance and had genuine intent. In the education and needs understanding stage we establish our credibility and could decide too if we were a good fit us to take on the work. Then as we looked at functional matches and implementation priorities along with their organizational change capability and resolve, that placed us well to understand all the risks. This process took some time as it moved to and fro on options discussions and as the prospect employed divide and retreat tactics and checked our competitive value.

But in the end with scope, resources and pricing all agreed , as the selected provider, the final step was to agree the terms and conditions to get their signature on a work order. The terms and conditions we included in our proposal had also been part of the practical discussion so we assumed our conditions and working assumptions would not present any issue.

But their legal people did a turn about rejecting anything that had even a hint of risk as they sought to remove clauses that protected us from events not of our making. In particular one clause that was red lined dealt with redress in the event of uncontrollable organization change in their business

As we struggled to find a compromise, suggestions were made to limit the clause to good faith wording and to deal only with specific risks. The watered down clause of course become unenforceable but the temptation to close the deal was by bow very high. This compromise however was still a red flag to me as I reflected on what my old boss would have said.

Blindly relying on fluffy terms to maintain commercial balance is just like lighting a long fuse and believing the bomb will never go off. Or when it does you will be long gone.

In our example we were concerned about:

1. Many projects have bad experience when key people leave or get re-positioned out. Often too it can even be the sponsors themselves who are gone. In such cases, ongoing carriage of process and managing changes defaults to the service provider to re-sell and continue to implement without the original sponsor support. It also becomes a new ball game as well as you start again at the re-educate stage with a new incumbent and are forced to defend agreements made with a previous one.
2. In cases where of a key person working with a service provider leaves they will invariably take with them knowledge and leave unfinished work This may revert back to the service provider to back fill and or/redo. Not having redress on this can have disastrous results not only for the service provider to unfairly bear the cost but also the weakened project may struggle and fail.
3. When the company gets taken over or itself does a takeover of others, there is always a material impact. Any material change in ownership will mean inevitable organizational change which in turn will always have some impact on a current project scope.

When preparing contracts, experience teaches us that pricing is only one aspect. Working assumptions that make this up must also be included and debated well so they are clear.

Terms should never be compromised without also reconsidering the risk and the pricing again. The negotiating approach should not be to reduce mitigation and cover, but instead to sell this as a mechanism to see fairness is re-balanced in the spirit of the original negotiations so nether side in the future can take an advantage

As a service providers it is not only for the burden of added cost or the overall success and gets us paid that is at stake if we get sloppy on our terms and conditions. Doing that can also lose us our reputations that keep us in business.

Do you have similar experiences?

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As part of our business at Sherwood Group Consulting, as Performance Management specialist consultants, we are often drawn in the tender process when it comes to working with large companies.

As a team we sometimes surprise ourselves when we win on our own.  But of course we never do it alone as we join large vendors like Infor, Microsoft and other big guys and with large consulting firms like Deloitte, who all bring with them their brand weight that can make us attractive.

To lead too it often makes sense, as software is now less important in terms of risk than the ground advisors who actually make it happen.  Many operators like us with corporate commercial experience on board with  business and vendor tools knowledge can make the difference. Now unlike days gone we no longer sell software but we still stand together with our vendors of choice and lead on deals for the consulting component. That way as we assess a prospect or client needs and then recommend a vendor, we are now often sought out as clincher for their sale. Taking the lead also allows us to leverage better value for our client  or prospect, which most often also gives greater value for everyone.

But enterprise projects these days are no place for the faint hearted  Clients are ruthless and commercially oriented in the mature business software vendor market. On knowledge and paying for such things procurements processes often don’t bother to invest properly in understanding what they need and the risks. Instead they rely on the market to cover them as they push all the risk to vendors.  So no matter how much you tell them they must do their homework, your contract will hang you out to dry if you don’t make it clear in the words and then fight for it as over and over again as you proceed.

When it makes sense to take the prime spot it also means joining all the players to win. That is equally tough and unrelenting as it adds bigger risks to carry the can if anyone fails.

Notwithstanding being advisors we often have no choice. Even as a minor players, be-it on design, integration, process change or the lot, if a vendor product fails, the whole project does.

Being advisory by nature always places us in the middle and we will wacked for sure if we don’t do our commercial and project homework well and know our game. It forces us to be very sharp so it is not a bad position as at least we can have some semblance of control and leverage for best options on the risk management . 

This week I was doing an RFI response which I hope will then lead to being shortlisted and then requested for a proposal.  From experience we know that deals are won and lost not on the tender but on the work that leads up to it.  So if you are lucky to be invited to respond, the information and effort and sales skill to deliver it well at the RPI stage will count.

All  RFI’s are different but having a standard boiler plate of responses can help a lot when you are slogging thru a tedious list of requirements.  Also if the RFP is sloppy or ambiguous as an appendix it may also help to narrow the risk and swing any influencer bias built into questions.

As a baseline I dug out an old FPI. It was one of those few and hard to win big deals we all used to see in the good old days. On that occasion we lead and won, based a mostly our submission. I must add that we had quality input from our partners, especially the senior people who trusted us to represent them to protect their value.

If the RFI does its job well, the next step is to respond to a request for proposal. Winning was fun as was the outcome when we got sign off on what we had promised and delivered.

If you take on tendering seriously to win it is a project of no small proportions in itself and should be treated as such.

 

As a useful reference I also found this process and a diagram at  invitation2tender.com

 

In the meantime  would like to share that RFI with you now. The client name, a large multinational public listed group in Asia, has been withheld for various reasons.

Any business considering a PM or BI solution, here are some questions to ask your advisors and vendors, to see how they stack up. Even though the client name is suppressed the client questions are real. Some privacy editing has been done on our responses.

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