Establish Best Value Range (Price and Ts & Cs)
Based on vendor data, contract information, and benchmark data, you can construct a target position (actually a range) of the intended acquisition. The Strategy Checklist provides a high level framework for this preparation step. The TDP Worksheet will help ensure you use a framework to plan for all deal elements.
Beginning with Price, utilize the Best Value Price Factor Guide for a primer on pricing related issues and how much flexibility you may have in negotiations with the vendor on these issues. Between benchmark data and the Price Factors Guide, you can establish an accurate range of expected acquisition price.
Revisit the Best Value Terms and Conditions Guide to ensure you are addressing all the Ts & Cs critical to your planned acquisition.
For overall value framework, utilize the TCO Workbook, especially if alternatives for maintenance, consulting services, and future requirements exist. The TCO workbook should be the foundation of all such cost/benefit analyses. A checklist format of elements that generally comprise TCO analysis is available in the Total Cost of Ownership Elements document.
Remember to focus on the entire life-cycle contract, not just the initial acquisition. After the contract is negotiated and signed, you lose most of your bargaining power for follow on items such as additional quantities, additional licenses, software maintenance/support, services, etc. Consult the Software Maintenance and Support Guidance for maintenance issues, and revisit the Best Value Price Factors Guide for pricing issues on current and forward looking issues.
To prepare for issues that are very important to the Vendor, review the Software Provider’s Negotiation Position guide. Develop you counter offers and trade-offs in you plan to obtain the items you need while willing to negotiate on the issues of utmost importance to the vendor.
Identify “Must Haves”
There may be certain terms/conditions that are absolute “must haves” in a transaction. If this is the case, determine if this is a significant issue for the vendor/publisher to grant this term. If it is not, no problem, but don’t highlight this as important in negotiation. If it is a critical “deal-breaker” term, use the TCO Workbook to determine the total life-cycle cost of obtaining this term. Alternately, try to establish some terms that are extremely important to the vendor/publisher on which you are willing to negotiate in order to obtain your “must haves”. The important discipline is to associate a cost or trade-off to obtain this “must have” and ensure that such cost or trade-off is genuinely beneficial.
Develop Negotiation Position Plan, including Trade-off Priorities
To prepare for negotiation, document your negotiation positions (and ranges) in the provide Negotiation Position/Strategy Outline. Both the Strategy Checklist and the Negotiation Checklist can help you prepare your negotiation position.