Guessing is not a strategy: How to build decision velocity with AI and real-time data
June 10, 2026 | Live Webinar
Categories: procurement
I looked at the first two steps of the procurement lifecycle: requirements and vendor selection, as explained by by Alex Sandercock of Turnstone at a recent womenintechnology event.
Today I’ll be looking at Step 3: Negotiating and contract.
A typical IT contract has 50-100 configurable clauses. That’s a lot to take in, especially if you aren’t used to dealing with procurement issues. In some companies, procurement and managing suppliers is part of the job, but in others you may have a team of buyers or procurement experts to help. Either way, as you are close to the project’s requirements it is likely that you’ll get involved in drafting the contract. Of those configurable clauses, you should consider negotiating about 20-50%.
Of course, the exact amount of negotiation you want to do when the vendor presents you with the contract is entirely dependent on what the contract says. It could be completely acceptable to you. But the important thing to remember is that you don’t have to accept the contract at face value. Don’t just focus on negotiating the costs and the legal aspects of the contract. You can negotiate on everything. After all, you are representing the company’s best interests. What is right for the vendor is not necessarily right for your company.
These discussions with the vendor should include things around warranties, as you would hope that the contract would specify that software would be delivered substantially error free. If that clause isn’t in there, add it. Make sure you understand the warranties and how to invoke them.
Service credits are another thing to look out for. What happens if the service is not up to scratch? Say you buy a piece of cloud technology for your project and it is unavailable more often than not? Your requirements would have specified up time, and hopefully that is what you get. But if it isn’t, you need to ensure that you have some kind of ‘payback’. Service credits are payment for when service levels are not reached. They do not need to be substantial amounts of money. Often service credits have to be authorised by the Finance Director, and that provides a level of visibility about the poor service that is being offered. That alone can be enough to improve the service for the following month.
The contract should include information on liabilities as well. Alex’s recommendation was that the liability should be unlimited for personal injury or death and limited for direct loss.
There will also probably be a standard clause on force majeure. Read this one carefully – does it include an exclusion for strike action? With all the ongoing industrial disputes in the UK Alex recommended that this clause be crossed out. Just draw a line through it and see what the vendor says.
Finally, consider what happens when you want to terminate the contract. As with the rest of your project, where you are continually planning for closedown, think about how you are going to get out of this contract when the time comes. What do you want from them on exit? Specify the documents they will provide for you, service reports, any training you’ll need for internal or external staff, any transition support arrangements and so on.
The final 2 steps in the procurement lifecycle are:
- Service delivery and performance monitoring
- Renewal, retendering or exit.
These happen when the project has delivered the software and the contract and project deliverables have been handed over the operational team who are going to use them going forward. The project structure no longer exists at the point that these lifecycle stages take place. However, think about these when you hand over the project into the live environment, as all the relevant contract information and the history of the negotiations should be passed over to the operational team.
Posted on: November 03, 2010 01:35 PM |
Permalink