Monday, December 24, 2012

Contracts: Negotiating

I admit, even after almost thirty years of dealing with vendors and their agreements, I am not the best negotiator. But the State did try to make me one.

In the 90s they sent me to San Francisco for a weeklong Conference sponsored by Joe Auer and ICN. (International Computer Negotiations). It really helped my perspective, insights and negotiating techniques. I got a 200 page manual out of it also. You can find them online at  At the time, after some searching, I thought they were the best company out there, and even though they have more competition now, I still highly recommend them. Their archives of computer negotiating tactics is top-notch.

The conference and manual were very helpful to me in day-to-day business dealings. I won a free ICN shirt there, when I answered the questuion "What does COTSS mean." (Computer Off-The-Shelf Software)  It refers to the two software paths, "make or buy."

You've heard about "make," as epitomized by those multi-year programming efforts writing huge amounts of code for companies, whether accounts payable, payroll, integrated business and marketing apps, ERP, or Customer Relationship systems. You only read about the ones that fail and cost millions of dollars. But Computerworld, the premier IT (Information Technology) magazine, often highlights the successful ones, and successful CIOs (Chief Information Officers).

When I started work for the State in 1970 as a stock clerk for the Bureau of Data Processing, we were using Assembler language to write computer programs, then we went to COBOL. In the 80s we went to structured COBOL. I even took classes in COBOL at Hamilton Adult School. During my long career with the state, I held a programmer title for two years, even though I wasn't one.I also held a DP (Data Processing) Analyst title for some time, which is a person who interprets user requirements in a programming context. I didn't do that either. But I finally found my Civil Service niche as a MISS III, Management Information Systems Specialist, i.e. a catch-all for most everything. At least, until I was bumped back down to my old title, DP I/O Control Specialist II, in 1992, when NJ was in the dumps financially and the State had layoffs.

"Buy" is what most people are familiar with now when it comes to software. There was a time for many years when the computers cost big bucks, and the software was a pittance. Now its almost the other way around. At OTIS (Office of Telecommunications and Information Systems), where I worked for six years, they had as many as 800 COBOL programmers writing computer programs for the hundreds of state agencies. Now they're called applications, or just plain "apps." Everyone is searching for the "killer app" that will make millions for its creators. Angy Birds is a good commercial example.

For most of my thirty years in state procurement, we bought COTSS. We bought tens of thousands of software licenses for state employees. At one time not long ago, the State had over 30,000 PC users. You get the picture. Then we had the big mainframe computers to run the apps like CICS or NJCFS for all the users.

Customer Information Control System was IBM's flagship method of providing transactional processing on computers, mostly terminals before they were replaced by PCs. NJCFS is the State's accounting system used by over 300 state agencies. Software for all these systems, large and small was expensive. One of my contracts cost $399,000 a year, just for maintenance of 10,000 licenses. Maintenance is technical support, updates and the like. I handled one large contract, a waiver, of over 70 vendors and their products for 80 agencies, that cost over $30 million annually. Sometimes single contracts would range from over $1 miilllion to $3 million to purchase.

So learning how to negotiate better was a must. Luckily I had Anne, Chet, Linda and Tony on my staff who were all excellent negotiators, and helped correct my faux pas. Especially Anne, She was the good cop to my bad cop. Carl developed and took care of our website (yes we had our own website), and all our back office databases using MS-Access.  Tony G. before him had started the basic processes.

Heady stuff working with vendors. You have to be confident, and you have to know what you're talking about. We tried to learn as much about products and pricing as we could, but it was difficult, what with all the customer non-disclosure agreements. Our goal was to know as much as the vendor, but they always had us beat. Thankfully now with the Internet, its easier to find information and deal with them as equals. Computer hardware, software and services salesman are like lobbyists -- they know the inside track. But they only had one agenda, and it was transparent, to take your money. And, holding that card, we could negotiate with some strength.

We had a couple of vendors who were exceptional, helping us to find, or make, discounts. But those were rare. We usually only heard from those reps when they wanted to upsell us.

To close, you should have recognized by now, that like any field, there's a lot of acronyms and abbreviations in IT. That's what made it fun, hearing all the new schemes from vendors, like ADABAS, or SAS, or SAP, or RDBMS etc. Lots of fun!

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