There are a very few natural born negotiators, the rest have to practice.....
Negotiations happen everyday and everywhere, in various forms all around us. Our day starts reasoning with the kids to make them drink a glass of Milk, negotiating the price of an antique showpiece you want, from a mom & pop Thrift shop.
Even Professional negotiations follow the same rules as these day to day negotiations, maybe on a more detailed level.
Not everyone is an expert negotiator, but someone who has the skills and has been doing it with the right attitude & panache, actually does a lot of winning.
Nowadays IT projects consume a major chunk of an organization's revenue, sometimes upto 20-25 percent according to a recent study. Many companies are utilizing their hard earned revenues to solidify and streamline their IT Process and systems, so that they can reap the business benefits in times to come. For this reason it makes sense for both parties in an IT deal to be Negotiations savvy. Due to the fear of an unknown outcome, Negotiations are very much dreaded by IT and business folks alike. It is kept as a last minute activity and attacked head on when time comes - Something like a Deer staring at a racing car's Headlights and then you know how it goes.
If proper time is spent on planning and executing negotiations, you will reap the benefits in times to come - in form of increased profits and revenues and successfully executed projects.
IT Negotiations occur at various levels - Marketing, Pre-Sales, Sales, Project Scoping, Resourcing, Contractual agreements in terms of Contract types, SLAs, Milestones and Commit dates etc
Negotiations occur between various parties - IT Firms, Servicing companies, Clients (Insurance companies in my case), at various levels - project level between Team members, leads and resources, clients and vendors, suppliers and end users etc
Negotiation skills help,
Achieve project goals and objectives
Avoid unnecessary conflicts and arguments later in the project lifetime
Build trust and priorities amongst the project teams
How to be a good negotiator?
Practice, practice and some more practice.
Good negotiation skills should be imbibed in your senses. Organizations usually have a cut out approach towards negotiation, something that defines their org culture, e.g. having negotiation planning meetings, specific negotiation templates and proceses etc. Overall, the negotiation Team's objectives and motives have to be aligned with the organizational agenda. The corporate direction could either be a Win All-Lose none (Aggressive), Win some-Lose Some (Moderate) or Win-win for both (Practical). It all depends on what strategic importance the deal has for the corporation.
On a personal level, an important skillset for a successful negotiator is soft skills - i.e. ability to have meaningful and engaging conversations. Conversations that lead the other party to reveal or atleast point to their interests and areas that will help you build focus and leverage. Something that will help develop relationships between with all parties involved. Remember here from a psychological perspective, everyone wants to win in life, be it negotiations or a free 5 day cruise to the Caribbean.
To cite an example - On one of the projects i was managing, we responsible for an Insurance Installation for a mid size P&C Carrier, the contract was signed based on initial high level estimation, but during the actual scoping and definition phase, the client wanted the everything under the sun to be included.
After much efforts and involvement of many a c-level executives and a heavy level setting exercise, the client finally agreed on the scope which could be delivered in the duration of the project. The way the client agreed to the option was, if the client wanted 100 things to be done in the project duration and cost, the quality of the product would suffer, but to have the best quality installation within the project cost and timeline which will help the client achieve set their business goals, it was beneficial to both parties to cut scope and go live with 70 items which would have the best quality.
Negotiation Steps
Every negotiation is a logical process, it has a beginning, the actual process and the end or specifically "Pre-Negotiation", "Negotiation" and "Closing".
Pre-Negotiation involves
Establishing an objective, background preparation or doing your homework, (Always start with a 10000 ft view of what you want out of the negotiation and why you want it - i.e. laying the objectives, ground rules and favorable expected outcome and finally how you wil get there).
This includes establishing a steering commitee, involving all related stakeholders, end users, everyone who will be impacted by the project or contract negotiation. Because doing this later in th`e game will not give you much wiggle room to try and resolve issues, incase an impacted party gets left out or finds something that may de-rail the whole deal. Preparing the RACI chart for all involved parties also helps as it clearly defines what is expected of each involved party. Laying down the negotiation rules and guidelines on rules of conduct during the negotiation path.
Negotiation includes
Meeting on the set dates and having discussions per agenda and guidelines decided. This helps to have focused discussions and helps achieve the desired positions effectively. Also make sure the Teams meet internally on a regular basis afterwards, while negotiations are in progress so if team member needs to be aligned or steered or some points need to be given in or held against, can be avaluated and then comes
Negotiation Planning should include contract break clauses, long term contract pricing policies and sharing the Total cost of ownership for a contract.
The total breakdown of all fees sould be enforced in a contract, SLAs and other KPIs to evaluate the levels of service provided.
Closure and Lessson learned (This is the most important step in every negotiation and is also the most missed one). If this is followed as a regular process, rather than a 1 time post negotiation activity or if done only for certain high profile negotiations it will miss its actual impact and utility.
Lessons learned will actually help you learn and do course correction which may help save many a future negotiations. This may also help you lay foundations for setting an organization culture in terms of process and templates setup
Essentially for any negotiation to be successful you have to have the right set of people, tools and strategies, past experiences, thoughtful planning and documentation.
