Red flags to look for when making a big IT purchase
Absent an experienced vendor management group on the IT side of the table, the two parties in a sales presentation are badly mismatched. The vendor’s representatives spend all their time doing exactly this, whereas most IT buyers send people who use technology, but don’t buy it for a living. The IT team has a distinct disadvantage.
In preparing to make a large purchase, you of course must employ the obvious due diligence. Get competitive bids. Ask current customers about product features, technical soundness and vendor responsiveness. Download and evaluate available test versions.
But even after you have narrowed down your choices and started meeting with vendor representatives, you can’t let your guard down. Fill your team with natural skeptics and prime them to spot any of the following warning signals:
One CEO demanded a six-month installation schedule for a new system in order to meet commitments he had made to his customers. Without checking with her delivery team, the head salesperson agreed immediately. As it turned out, the delivery team said that six months was difficult but achievable — but they thought they had two additional months just to plan, before installation began. Nobody was happy when the differing expectations became apparent. The delivery team then wasted a month replanning in a vain attempt to fit within the six-month window, with the result that the project took nine months to complete. Needless to say, no one was happy.
Today, you’re much more likely to find the sales team and the IT buying team locked in detailed discussion’s about a product’s features, capabilities and suitability for the buyer’s environment. The best salespeople have deep knowledge about what are likely to be highly complex products. If you come across a salesperson who seems like a throwback, more interested in setting up dates for elaborate meals or golf games than in discussing product specs, you should see a red flag.
A signed contract encourages the perception that the hard work is done and there is no hurry to complete contract details. A signature removes the sales team’s incentive to complete the work, and the buyer is left with far less leverage to push the completion of those details. Because the master services agreement documents the entire relationship between the buyer and the vendor, it needs to be comprehensive and accurate. If you must sign the agreement before everything is final, include language that identifies the specific schedules or exhibits that will be updated. Then keep the pressure on your team and the sales team. When there are questions and the sales team is long gone, the contract is the first thing both sides will review. If the worst happens and there is litigation, the contract will be the critical document.
Before the contract is signed, you are the big dog and everything is negotiable. After the contract is signed, you may just be left barking at the moon. Watch for sales staff behaviors that are not in your long-term best interests. And don’t fully commit psychologically before you’re ready to commit on paper. You have to keep the option of walking away as your ultimate point of leverage.
Bart Perkins is managing partner at Louisville, Ky.-based Leverage Partners Inc., which helps organizations invest well in IT. Contact him at BartPerkins@LeveragePartners.com.