If you’ve ever worked in IT procurement in a very large organisation, there’s a certain factor you may have observed that used to surprise and annoy me. It was the ‘stickability’ of certain major suppliers. And in particular IT consultants, IT integrators and outsourcing type firms. It seemed that, no matter how hard you worked to reduce overall spend with them, they would pop up elsewhere in the organisation, doing something slightly different!

There’s nothing necessarily wrong with that of course, but frustrating at times if we were in the middle of an IT cost reduction programme.  A similar observation applied to budgets; we’ve probably all seen consulting budgets slashed, only to see very similar looking spend suddenly classified as ‘contractors’, ‘training’ or the ubiquitous ‘miscellaneous’.

Consultants are taught to infiltrate all areas of a corporation and sow seeds such that they can continue to generate new business from that corporation even when the original consulting contract(s) has been completed. And when times are hard, consultants work even harder at embedding themselves into any on-going revenue stream.

So how do you stop them? Simply demand that they report regularly on what they are working on and what they are bidding for. That way, you can get visibility of their work and stop some of the more frivolous activities at source

When it comes to reducing some of the catastrophic problems caused by redundant IT, what matters is what’s in it, and how it’s put together. A company’s end-of-life processes are crucial when it comes to reducing the amount of kit that gets sent to landfill or illegally exported, but it is at the procurement stage where IT managers can flex their consumer muscle and help to bring about changes in the way IT is manufactured.

There are two ways for an organisation to introduce environmental elements to an IT procurement process. It could either research and write its own environmental requirements, or it could stipulate that the successful supplier will be a member of an environmental scheme such as Epeat, which rates electronic products according to their environmental attributes.  The idea is that each supplier will adhere to a certain standard of ethical manufacture, meaning buyers know how green the products are.

Large corporates and government organisations are often aware of the legal pitfalls of hazardous waste and of the PR nightmare that can ensue if you’re caught, and they deal with it properly as a result.”But small businesses who buy maybe 200 to 500 computers a year don’t have this reputational pressure. They might not realise they have liability.

So the message here is be careful, be diligent and check your supplier’s green credentials before accepting delivery of that next batch of hardware.

Purchasing IT and associated service agreements can be daunting for any business. Mark Bartrick, Managing Director at Silver Bullet Associates advises businesses to be careful. At a recent IT Forum dinner, Mark was asked to outline some quick tips on how to successfully negotiate IT contracts.

If a business lacks IT negotiation experience, turn to a consultant. 
Consultants like Silver Bullet Associates can save businesses a lot of time and money because they have ‘been there, done that’ before.  

Remember that all contracts are negotiable.
While a vendor might say a client is getting its standard contract, it is only standard because the vendor says so. If you don’t like it, negotiate a better one.

When it comes to pricing, the devil is in the details.
Itemise bundled pricing. Demand clarity of discounting. Spread payments out. Just like working with a home contractor, paying for everything at once can reduce leverage with a vendor if there’s a problem later. Also be sure contract cancellation policies are clear.

Be creative and persistent in efforts to lower prices.
If the sales rep can’t or won’t lower prices, ask who has the authority to do it and go to him or her.

Don’t accept the first price they offer.
You’ve got to push as hard as you can without destroying the long-term relationship.

Consider signing a multi-year contract in certain cases.
For emerging technologies, it may be better to go year-by-year, but for some software, a multi-year contract makes sense to get better pricing.

Get information from peers.
Talk to other businesses; compare notes on products and vendors.

Spell everything out.
Although it’s more work, put “deliverables”—specifics of what a product will do at what time—in the contract. It can even include consequences if the products don’t perform as expected. A service-level agreement might say, for example, that for every hour a server is down, the vendor credits the client money.  

Merry Christmas to all our clients and to anyone involved in IT Procurement. Let’s hope 2010 is a better year for businesses everywhere. Budget cuts and financial squeezes have affected everyone this year and many are still struggling. So let’s all be positive that 2010 brings with it new found optimism and a genuine economic recovery. We have saved a lot of money for our clients this year and we plan on helping even more businesses save even more in 2010. As the TESCO adverts say, ‘every little helps’.

Do you need interim IT Procurement help? The skills and expertise offered by temps and professional contractors is highly valued by a wealth of organisations and many of them see the engagement of short-term procurement expertise as a key element of their recruitment strategy. Whether you are looking for temporary IT Procurement to help to plug a gap in your resources, or want to bring in external expertise to give your Technology sourcing team a short term boost during an important procurement project, Silver Bullet Associates can help. www.silverbulletassociates.com/our-services/need-interim-help/

The financial advantages of engaging interim help:

• Employers only pay the daily rate
• No employer liability for NI or employee benefits such as holiday pay, absence or retirement funding
• No long term contract or commitment
• Minimal notice period

Interim IT Procurement Managers  

We have interim IT Procurement Managers who are seeking flexible hours in exchange for their highly sought-after skills. All of our interim managers have already carried out assignments at other Silver Bullet Associates clients – they are all highly experienced and knowledgeable IT Procurement professionals.

The advantages of hiring an interim IT Procurement Manager

• Hit the ground running
• Knowledgeable about IT Procurement techniques and best practices
• Experienced; been there, done that
• Highly specialist and proven negotiation skills
• Can act as a procurement/negotiation coach guiding your staff, or as totally ‘hands-on’
• Focused on helping you deliver your procurement projects and saving you money

I was asked by a client this afternoon to give him some quick tips on negotiating the best deals. He has just taken on a new role which will mean he is negotiating face to face with IT suppliers for the first time. Previously, he had an IT Procurement person doing the negotiations for him, but his Company has made the Procurement person redundant as a cost saving measure. Now I’m not sure getting rid of IT Procurement people at this time is a cost saving measure; it’ll probably end up costing the Company more when they overpay for IT stuff in the future due to lack of IT Procurement skills in-house. But anyway, in answer to my client’s request for some quick tips, I said there are three main ways to get the best deals: No.1: Ask for a better deal. Don’t be shy; just ask. If that fails, then No.2: Ask again. And if that fails, then No.3: Ask again but ask louder this time. Now I know this is an awfully simple way to approach negotiations, but as a rule of thumb it’s a great way to get things started. And not just in IT but when ever you want to negotiate a better deal for anything ; new TV, car, house, pay rise, golfing weekend away, what ever. Ask, ask again, and then ask louder. Remember, you don’t get if you don’t ask.

Under pressure to reduce expenditure and find cost savings, IT Procurement departments need to find new ways of removing cost without damaging the business. The challenge is to find where IT costs are not directly supporting demonstrable business benefits. Some examples include eliminating unnecessary projects that won’t add real value to the business, delaying new system purchases where a ‘make do with what we’ve got’ attitude is acceptable, and to operate at the leanest staffing levels without  losing a skills base that will be required when the economy turns around. The ideal scenario is to find projects that improve efficiency, not reduce effectiveness. According to various surveys and validated by many Silver Bullet Associates clients, operational IT budgets are being cut between 6% and 10% this year. So IT Procurement have their work cut out. One project we see underway in several of our clients is reviewing whether any software or hardware costs are tied to the number of employees or users; if they are then there is an opportunity to re-negtotiate with the IT supplier and re-set the costs at a lower level. Another popular project is to undertake a full asset management review to make sure no-one is paying for what they don’t have or don’t use. And price benchmarking is increasing as IT Departments search for negotiable savings opportunities.  All you have to do is to dig deep enough as there is gold in them hills (of IT contracts).

In response to a growing number of requests, Silver Bullet Associates is delighted to announce the launch of our sister website www.negotiationpower.co.uk. This provides an online forum where anyone who buys IT or is responsible for IT Procurement can share their experiences, network with their peers, and learn from other IT Buyers who have ‘been there, done that’.

By joining the Negotiation Power online community, you can:

• Save money – get advice on how to negotiate better deals with your IT suppliers
• Make useful contacts - network with other IT Managers and IT Procurement professionals
• Share best practices – in Product selection, Procurement and Supplier negotiations
• Obtain valuable market intelligence – on IT suppliers and their products

We’re offering everybody a 30 day free trial. So go on, check out the website, sign up and get involved!