The Cost of Complacency in Technology Agreement Negotiations
During a recent discussion with a client, I asked how their renegotiations were going with one of their main suppliers. I was taken aback when he said that the negotiations were put on hold and that he felt he could not renegotiate given that the supplier delivers the contracted services and the cost is not outrageous. He admitted that his team is comfortable with the supplier and thus, he sees no reason to contest the new contract.
Comfort and Complacency are possibly the biggest risks to any company.
My client is comfortable with his supplier, so confronting the status quo feels awkward. However, if you never introduce the opportunity to renegotiate, how will you ever know if the offered pricing, and even the services/products/terms, are the best deal?
Many risks result from this situation:
Does my client know if the pricing is commensurate with his competitors?
Can other suppliers potentially provide better services?
Is the supplier keeping up with new technologies?
Should the terms and conditions of the contract be reviewed on a regular basis?
Organizations lose money when they avoid addressing the above questions with suppliers. If all of the elements of a technology agreement are not reviewed and challenged on a periodic basis, this comfort and complacency, (and possible dereliction of duty), could result in the greatest cost of all—the life of the organization itself.
Limited resources, expertise, time, and more importantly, relevant data, prohibit technology organizations from controlling the narrative about their technology spend. No master’s classes or PhD classes exist for technology procurement and, for multiple reasons, it can be the most difficult category to procure.
PAAS partners with companies across the globe to guarantee a minimum 5x ROI. As an extension of your procurement and technology team, PAAS provides a “no risk” offer and is motivated to identify and capture wasteful technology spend.