Who’s your best outsourcing deal negotiator—Hank, the ‘people guy’ that everyone loves? Is your negotiating tool kit limited to your RFP templates and supplier scoring sheets? Is your goal to get the lowest prices for the highest SLAs in the shortest span of time?

That kind of ad-hoc negotiating behavior leads to failed outsourcing deals time and again. But there’s a better way—and one that should be natural for process-driven IT organizations. It’s time to start treating IT negotiations as a business process that permeates the entire IT organization, says Jeff Weiss, partner at Vantage Partners, a Boston-based negotiation and relationship management consultancy, who also teaches the science of negotiation to cadets at the U.S. Military Academy at West Point and MBA candidates at the Tuck School of Business at Dartmouth College.

And those skills, tools, and processes will reap rewards not just at the negotiating table, but in the complex day-to-day interactions the IT organization have with end users, customers, suppliers, and partners, says Weiss, who worked closely with the authors of Getting to Yes: Negotiating Agreement Without Giving In during his days at the Harvard Negotiation Project.

CIO.com talked to Weiss about how to build a business process that increases IT’s return on negotiation.

CIO.com: Why is it important for IT leaders to build negotiating capabilities at an organizational level? Isn’t having a handful of skilled negotiators enough?

Jeff Weiss, Partner, Vantage Partners: Most IT organizations are engaged in many, many negotiations each day, both internally and externally. Negotiating effectively is critical for much more than structuring big deals, like systems integration projects, or large BPO or ITO contracts. There are important interactions with suppliers, partners, customers and end users on a daily basis, and many of those interactions involve working through differences or even contentious issues. Almost everyone in the IT organization is negotiating in some manner every day, and to enable their effectiveness takes providing organizational support.

Even if one is solely focused on that smaller cadre of people doing strategic negotiations, there is a common fallacy that if we have good "people" people, they’ll get the job done well, or that an experienced negotiator can get it done on his or her own. Far too often skill alone simply does not carry the day. To be efficient, creative, and negotiate tough on the merits, negotiators need to be supported by a true negotiation process with defined activities, accountabilities, tools, and check points. IT certainly has defined processes for application development, testing, and rolling out new systems. CIOs need to start treating negotiation as a business process.

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The methods the RFP process employs to "normalize" the proposals of various vendors and create apples-to-apples comparisons virtually locks out any attempts by a provider to bring something creative to the table. The more detailed the buyer gets in the RFP, the less room there is for innovation or flexibility—which outsourcing customers claim to want. And outsourcing customers often take an everything-but-the-kitchen sink approach to their RFP requirements, including not only need-to-have requirement, but nice-to-have services.

In response to a recent ISG survey, service providers said their pricing was at least 10 percent higher when responding to complex RFPs An alternative is what Young calls a request for solution (RFS). In contrast to a detailed, buyer-led RFP, the RFS is an open-ended, collaborative process. The customer describes its IT environment, objectives, concerns, and risk tolerance and the potential suppliers come back with unique solutions that meet those general requirements.

"In buyer-led commerce — like an RFP or RFQ — the buyer dictates the terms and scope of the commerce. In seller-led commerce, the seller makes—often unsolicited—offers to the buyer on the seller terms," says Young. "The RFS is meant to bridge these approaches—getting the best aspects of both."

Young likes to use a vacation-planning analogy. With a traditional RFP process, you’d ask a travel agent find the cheapest package for a family of four to fly from New York to a hotel room within five miles of Disneyworld for five days in June. Taking the RFS approach, you’d say you want to take a family of four on a five night vacation and spend $4000 or less and then select from the variety of options the agent provides that meets those criteria—a cruise, a camping trip, a European tour, or Disney.

When a buyer really wants to transform an IT environment, they may not know what they want even though a detailed RFP implies that they do. An RFS can reveal options an outsourcing customer may not have thought of, says Young.

When Young first began offering the RFS option four years ago, only a few customers were willing to try it. Today, just under half of those he works take an RFS approach, at least for part of a deal.

The option provides valuable getting-to-know-you time. "An RFP is very formal. It’s doesn’t build trust," says Young. With an RFS, "you’re jointly working together to solve the problem right from the start. And that time is better spent starting off the relationship on the right foot." It can also shift the buyer’s focus from who has the lowest price to who they mesh with best.

One consumer products retailer who recently issued an RFS with Young ultimately chose a service provider based on soft benefits. "They liked them, they trusted them, they fit in culturally," says Young. They shook hands and immediately began writing the statement of work and the contract exhibits. "But [the customer] also made it clear if [the provider] jerked them around, they’d put an RFP cover sheet on the solution and send it out for competitive bid," says Young."

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