Get the Timing of Your Negotiation Right
May of 2021 was a good month in a lot of ways - the world is starting to open as vaccination numbers increase. Consumer confidence is spiking to levels not seen since before the pandemic, as businesses continue to get back to normal.
For Oracle, May was a very busy month - not only was their stock hitting all-time highs, opening June at over US$80.00, but it was also year-end.
Those of you who are veterans in buying cloud applications know how important quarter-ends, and especially year-ends are to those key firms. The culture of ‘hitting the number’ is pervasive in those organizations, filtering down through the sales teams that are your key contacts as you come to the finish line on a new cloud agreement, or even a renewal.
Those deadlines of the last day or week of the quarter are very real to sales teams, even if they may seem artificial to you. There is so much pressure to make a deal work, and that pressure mounts quickly if your contract has been forecasted to be completed - companies like Oracle rely on guidance to Wall St. as part of the ongoing investor process.
With May being such a busy time for Oracle’s teams, particularly in cloud applications, we heard again and again from CFOs that the time crunch really hit them. Those CFOs that were dealing with their own quarter- or year-end seemed to have the hardest impact.
‘The requests for meetings, the late-night emails for contract revisions. I was trying to balance my time. Getting ready for our close, approving our own late deals.’
While it may appear an unavoidable conflict, needing to be working the hardest to get the right deal at the right price, while you are at your busiest point of your own year - it’s not. It takes a bit of planning and foresight, but you can ensure that you and your vendor aren’t tripping over each other’s timelines.
As with most aspects of contract negotiation, it begins with great communication. Ask your sales teams about their quarter end - know in advance as you begin the selection process, so you will know exactly when the time crunch will be at its worst. Be upfront about your own timelines - if the last two weeks of a particular month is a bad time for you to secure the resources - operational, financial, legal - to get a deal, let your counterpart know early.
Your vendor’s sales team will look to use any tool available, including pricing incentives to get your contract closed. You can use your own timelines as leverage in the same manner, but on YOUR schedule. There is nothing wrong with being clear that, for example, ‘If this isn’t buttoned up by Aug. 15th, I won’t be working on any part of this contract until after my Q1 close - Sep. 10th.’ You and your rep are now on the same page, and the deadlines and timelines of your negotiation are now yours, and not your vendor’s.
Another key area in communication is workload, and it’s critical to ask the right questions. It’s important for you to know how long your vendor’s legal approval will be on contract items that require changes to satisfy your legal team or counsel’s review. Resource planning may come into play if you need operational or implementation teams to agree and sign off on a rollout plan. It can be tough to get two people on the same call some weeks, and getting four or more can be near impossible, even for a mission-critical application such as ERP or MRP.
Be clear with your internal stakeholders what your required timelines look like for your new contract, and solicit input on their expected level of involvement with the review.
No one likes the last-minute scramble of bringing an organization together at the last minute to get a contract across the line. Plan early, and communicate often with your vendor to avoid the stress of adding a contract negotiation to your busiest times. Remember that you can always lean on an outside team of experts such as Cloud Negotiator to ensure you have time for your main job.