How many times in the course of a day do you negotiate a situation? Planned and unplanned opportunities for negotiation typically occur several times a day, yet more often than not, people find the act difficult. If you push too hard, the deal goes astray. If you are too soft, you are a pushover. The key to sound negotiation is ensuring the appropriate approach to each situation.

In the IT environment, there are many kinds of negotiations; IT directors are continually involved with users, partners, executive management, staff and, of course, suppliers. The environment in which we negotiate is now so specialised that a generic approach no longer delivers the best results.

There are similarities between best practice in negotiation and implementing best practice in the workplace supported by the deployment of IT systems. As in the IT environment, strategy drives process which, in turn, drives implementation and support. This means that a negotiation strategy should be defined, a negotiation process designed and implemented, and a supporting infrastructure established to continuously drive the improvement of negotiated outcomes while minimising the losses associated with poor supplier and user agreements.

IT negotiators should also have a basic understanding of purchasing strategy and different negotiation styles.

Everyone has preferences for certain kinds of activity in the context of understanding, interpreting and engaging in communication and negotiations.

The Herrmann ‘Whole Brain’ Model provides a useful tool for understanding our negotiation preferences:

Quadrant A – our rational self: Analyses, quantifies, is logical, is critical, likes numbers, knows about money, knows how things work;

Quadrant B – our safekeeping self: Takes preventative action, makes procedures, is reliable, organises, is neat, is timely;

Quadrant C – our feeling self: Is sensitive to others, likes to teach, touches, is supportive, expressive, emotional, likes to talk and feel;

Quadrant D – our experimental self: Infers, imagines, speculates, takes risks, is impetuous, breaks rules, likes surprises, is curious, plays.

We all have preferences for activities in each of the quadrants, but fewer than three per cent of people have an equal preference for all four. More than one million people have completed the Herrmann Brain Dominance Instrument profile, so it is possible to monitor the trends that are of particular interest to negotiators in the IT environment. For instance, professional buyers who represent organisations in negotiations with IT suppliers typically have strong preferences for the A and B quadrants, but less of a focus on C and D. This approach often leads to opportunities being missed to extract additional value.

Sales representatives from IT suppliers have a stronger preference for the C and D quadrants. They often overlook key risks, hampering identification of the real business impact offered by their proposal.

The best advice is to pursue a ‘whole brain’ negotiation model where attention is given to activities in all four quadrants:

Quadrant A – Value
IT negotiators must have an understanding of the facts that underpin any negotiation. Failure to gather and understand the relevant facts that support optimal deal making results in failed negotiations, or negotiations where value is left on the table.

Quadrant B – Process
Any negotiation without a robustly defined negotiation process and management infrastructure runs the risk of a less-than-ideal outcome. A framework is required to provide an environment in which risks can be proactively managed. A robust negotiation process ensures positive momentum and provides a reference for avoiding unforeseen complications and risks.

Quadrant C – Relationship
Agreements can only be concluded between organisations represented by people. The way we interact with other people is critical in negotiation success. The importance of relationships in negotiation is amplified in an environment where continued partnerships and long-standing relationships result from business interactions.

Quadrant D – Vision
Parties to an agreement need a shared vision of the losses and benefits. It is only by having an understanding of all parties’ respective vision that driving motivators or interests can be determined. A key part of negotiation competency is the ability to generate options that will serve the needs and interests of all involved.

For IT executives acting as custodians of company resources, it is essential that the appropriate negotiation strategies and tactics are used to achieve company objectives. And there are a number of different negotiation engagement models.

For example, it would be unwise to engage in collaborative negotiations with
a supplier of commodity products or services. Similarly, it would be unwise to engage in highly competitive negotiations with suppliers providing solutions that will have a significant strategic impact.

In negotiations, as in life, victims have a tendency to become aggressors. It follows that if negotiation is too competitive, suppliers are often left feeling they need to reclaim what they believe is rightfully theirs. The symptoms of a deal that was negotiated too competitively can be recognised by the issues that come up later – service level agreements, escalations and so on. If deals are not profitable for suppliers, they will go to great lengths to cut corners to meet profit targets – often to the detriment of the clients who drove too hard a bargain.

When negotiating with suppliers providing strategic solutions that have a high value to an organisation, it is important to create a collaborative framework for the negotiations to extract maximum value from the proposed partnership.

When negotiating in the IT environment, it is critical for practitioners to approach the entire negotiation process – preparation, engagement and debriefing – from a ‘whole brain’ perspective and to apply the appropriate negotiation strategy in support of organisational objectives.

Jan Potgieter is chief executive of The Negotiation Academy – Europe, and spent many years as a senior executive in the IT industry before founding the company.
See www.negotiationeurope.com

Summary: Best practice

There are four important aspects that will have a significant impact on negotiations:

Define a negotiation strategy

Answer the following questions:
• What group or groups of people should be capable of negotiating effectively?
• What are the key characteristics of successful negotiators in your department?
• Should you be providing any free products or services to clients or users?
• Should you be providing any negotiated concessions to your counterparts without receiving a counter concession of equal or greater value in return?
• What are the drivers in your organisation for the implementation of best practice negotiation skills?
• How will you measure success in the negotiation environment?
• What are the specific actions that you will need to take to implement an organisational negotiation strategy?

Implement a supporting negotiation process

The negotiation process must be robust and have a high value to its users. The most important consideration in implementing a negotiation process is ensuring a consistent application of best negotiation practice across the department or organisation.

This will result in a shared vocabulary and a common platform for the evaluation, refinement and improvement of negotiated outcomes. Build your negotiation process around the following key areas:

• Deal qualification
• Identifying deal objectives
• Batna analysis (Best Alternative To a Negotiated Agreement)
• Defining roles in negotiations and the composition of teams
• Negotiation strategy and tactics for specific deals
• Negotiating climate
• How to organise debriefings

Implement a negotiation training programme

Once a negotiation process has been defined, all participants should be trained in its use and application.

Create a negotiation support environment

It is important for executives to create an environment that supports the development and application of an organisational negotiation capability. Some of the key enablers are:

• Creating an environment to simulate negotiations on a regular basis
• Creating a negotiation reference database – in its simplest form a log of resources with reference to the types of negotiation and relevant experience of the organisation’s negotiators
• Automating the use of tools to support the negotiation process
• Providing staff with individual coaching in best negotiation practice by managers.

Case Study: Altering negotiation for a changing business

A large global IT organisation with a focus on the telecommunications sector found that the size of the deals it was negotiating increased substantially as the underlying technology infrastructure moved from analogue to digital. The deals being done by the sales teams escalated from between £1m and £10m to more than £300m, because the products now had regional and national relevance.

This meant a change in the way negotiations were conducted with suppliers, partners, manufacturing, clients and other internal and external stakeholders.

Early diagnosis of the problem led to the definition of an organisation-wide negotiation strategy and the design and deployment of a supporting process. The process was designed to support the relevant purchasing and sales strategies, and training is being rolled out across the company to instil a corporate negotiation capability with a specific focus on maximising margins and savings on purchasing budgets, and on identifying and mitigating risks.

Early results show enhanced returns as a result of:

• An improvement in the skills level of all negotiators through best practice training.
• The application of a uniform negotiation process that allows for the sharing of relevant information on a uniform basis.
• A common negotiation vocabulary and a best practice, cross-cultural negotiation approach across territories.
• Individual negotiation competency, preference and style analysis.
• Optimal negotiation team composition and role definition.
• Best practice debriefing and refinement