Vendor and Sourcing Management: Negotiating with Powerful Vendors
This IDC study is designed for senior executives responsible for contract negotiations with 3rd Platform suppliers that provide IT services essential to an organization's business needs. This study reviews the common causes of power imbalances that occur during the negotiation process and outlines alternative negotiating strategies, including:Identifying intangible sources of organizational values that can be leveraged during the negotiation processChanging internal business processes to optimize purchasing power and preferencesSupporting the establishment of a new supplier stakeholder within the marketDemanding that the supplier comply with a hard-line ultimatumIDC advises buyers to continually revisit their negotiation demands to ensure that all aspects of a contract or agreement are addressed and that they avoid focusing exclusively on cost and price. This study should be considered in conjunction with IDC PeerScape: Practices for Effective and Efficient Technology Contract Negotiations (IDC #258831, September 2015). "An organization must choose either to work with a strong or near-monopoly supplier or take steps to weaken the monopoly," says Ron Babin, adjunct analyst with IDC's Research Network. "Both options will result in a shift in the power dynamic; however, there will be varying levels of supplier retaliation or pushback that will need to be considered."
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