Problem
The supplier proposal was based on a detailed list of functional requirements and a proof of concept. The supplier was hungry for the deal and took various tactics to optimise their position including:
- Providing information piece meal
- Dividing and conquering different areas of the client project team to get information
- Applying pressure by threatening to remove commercial benefits
Our role was to clarify the proposal and align the client team in terms of approaching the supplier.
Solution
We supported final negotiations with the preferred supplier, stating it was still an open competitive tender. To structure the negotiation, we dissected the offer and identified the cost drivers, license type and volumes.
Secondly, we identified the key levers:
- The supplier wanted our client as a customer and reference
- The supplier wanted the deal closed by end of period to meet targets
This preparation led a focused negotiation that delivered tangible results to our client.
Result
Initial negotiations delivered some movement in both licensing costs and commercial terms, however by engaging relevant senior stakeholders and aligning relationships with the supplier, bigger benefits were unleashed.
Overall, a 30% reduction in licensing costs over the contract term plus commercially beneficial special licensing terms that will deliver flexibility to the project through implementation. Most importantly both parties enter the project with a good relationship.
