More Secrets in Vendor Negotiations

More Secrets in Vendor Negotiations

This was a follow-up to a similar session held last year.

(L-R) David Myers, Michael Gruenberg, Matt Dunie

(L-R) David Myers, Principal, DMedia Associates, Inc.; Michael Gruenberg, Owner, Gruenberg Consulting LLC; Matt Dunie, CEO, Data Planet

Libraries deal with hundreds, even thousands, of vendors every year.  Academic libraries spend $4 billion on the acquisition of products and technology to serve their users.  David Myers, Michael Gruenberg, and Matt Dunie discussed how you can be better prepared for your next negotiation.  It is important to understand the components of the negotiation, create a viable negotiation plan, understand how to leverage resources, and develop templates to help manage the process.  Vendors spend a lot of money educating their staff how to sell, have sophisticated tracking software to manage the sales process, and have teams of people with specialized skills.  Their objective is to get part of your budget.

Selling is a give-and-take process.  Some questions library staff often are unclear about are:

  • How should I organize to negotiate?
  • When should I ask the price?
  • How do we use contract issues to our advantage?
  • How do we deal with the legal issues of fair use and community support?

A new survey of 142 libraries revealed that only 19% of them had a documented negotiation process; most decisions are made by a committee; and about half of them have an individual dedicated to licensing. 72% do not have a documented set of objectives for each major negotiation. Almost 60% said they could have done better in the negotiation, and almost all do not have an “information for vendors” page on their website.

Little training is available to deal with vendors. How many courses did you take in library school to prepare you to deal with the salesperson? How many courses in I-school were devoted to prepare you to work with vendors? About 90% of the schools do not provide much, if any, training courses.

The buying power of libraries has decreased by about 6% in the past few years. But don’t worry, you do have leverage. The information industry is a $721 billion business. Vendors are merging, and they are strongly after your business. It is in their best interest to make sure you are happy. Here are some leverage points that can be used in vendor negotiations.

Leverage points

This is a zero-sum game with the objective of getting as small an annual price increase as possible.

Elements of negotiations include objectives, timetable, team, and strategy.  If you go into the negotiation without objectives, you are missing the boat, but you must also think about the vendor’s objectives and decide what you will settle for. Here is a useful negotiation timetable.

Negotiation Timetable

Negotiation Timetable

Don’t reveal the price you are willing to pay at the beginning.  Research is the most critical part of the process.  You are in control of the timetable.  You do not have to sign when the vendor says you have to.

Form a team to help you negotiate and document their roles before you start. Make sure your supervisor is on the team. Define the situation, identify strategic imperatives, and recognize the leverage points you have.  Price and terms must be defensible; value is the most important.  If there is not an equitable partnership in the negotiations, they will fail.

Legal items to be addressed:

  • One of the most misunderstood terms is fair use.  Here are some important points to remember.

Fair Use 1

Fair use 2

Fair use 3

  • Authorized users are those who have been given specific permission to use a particular piece of content or a technology resource by the campus unit responsible for operating the resource.
  • Governing law and venue: what law is applied if there is a problem. Venue is a place for a trial.
  • Indemnification: who is responsible for damages if one party is wrong.

Perception vs. reality:

Perception vs. RealityPrice defense:  Here is an important 5-word question that you must be sure to ask: “Can you defend the price?” Understand the components that make up the price and ask about them. Here are some possibilities:

Price Defense

Final things you should know:

Things to Know

Don HawkinsDon Hawkins
Charleston Conference Blogger and Against The Grain Columnist

 

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