Negotiation is as Simple as Signing a Contract, Right?

A software selection process can be intimidating, time consuming, and frustrating.  Where do you start?  What are the rules of engagement?  What if the software vendor isn’t responding in a timely manner?  What if there isn’t internal alignment between IT and the business?  These are just some of the questions that are likely to arise during a software selection process.

After you have undergone a formal software selection process, you will then begin negotiations with the final software vendor.  This includes evaluating and ultimately signing the contracts:  Software License Contract(s) and Statement(s) of Work (SOW).  Once you have these contracts, it should be quick and easy to sign off and be done, right?  Wrong!

Negotiation is a critical activity that needs to be thoroughly and skillfully executed or you could end up spending unnecessary money and/or opening up the doors to a variety of project risks if you miss something.

You can avoid some common negotiation pitfalls by doing the following:

Ensure there is alignment between IT and the business – a software implementation should be looked at as a business project supported by IT.  If it is looked at exclusively as an IT project, it is doomed to fail because you won’t have business support and contribution making sure the system is configured to meet the business needs.

Consider the holistic “all-in” costs of the implementation, which includes:

  1. Software Licenses
  2. Maintenance Costs
  3. Infrastructure & Hardware Costs
  4. Implementation Costs (with all company sites / locations going live):
  • Vendor consulting fees
  • Additional professional services
  • Related internal travel & expenses incurred throughout the project

Ensure there is alignment with the “In Scope” and “Out of Scope” items, outlined in the SOW:

  1. Modules being implemented
  2. Required third-party extensions
  3. Identified integrations and interfaces
  4. Key activities within each phase
  5. Known customizations
  6. Key deliverables throughout the implementation

Complete a resource gap analysis, which includes:

  1. Identifying when your business & IT resources are available to support the implementation
  2. What skillsets are required throughout the implementation
  3. Where gaps exist that need to be supplemented with additional external resource support

In short, when you are undergoing a software implementation negotiation, spend sufficient time planning and preparing for that effort, ensure these efforts are reflected accurately in all contracts, and maintain a “big picture” mentality to ensure all aspects of the implementation are accounted for, including all of the company locations going live, not just the first location.

Contact Information

If you have questions or comments about this blog post, please contact Alex Persha (

Phone: 312-602-4000
222 W. Adams
Chicago, IL 60606
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