Tech advisory procurement is the critical phase focused on sourcing the right software and negotiating the best deal for clients.
For background, here are the previous steps that led up to this point:
- Found the right client 🔍
- Completed the discovery process 💡
- Priced your services and provided a quote 📃
- Analyzed the tech stack and completed the needs assessment 🔦
- Gathered the requirements and scoped everything out 🔭
- Completed the research and solution design and identified the best apps and workflows
In this blog, you’ll learn about the procurement process, prepping for negotiations, and strategies for getting clients the best software deals.
Understanding The Procurement Process
The length of the procurement process can vary depending on complexity but here’s how it normally goes:
1. Needs Assessment
Identify client goals, pain points, and needs through interviews, surveys, and usage metrics
2. Vendor Research
Research which apps best meet your client’s needs. Look for customer reviews, ratings, case studies, demos, and anything that gives you a hands-on or in-depth look into the software and how it works. Shortlist those with the most potential.
3. Vendor Selection
Evaluate and vet the vendors on your shortlist. Use the needs assessment to set criteria to judge the vendors against and compare their product capabilities, pricing, culture, and customer service/support to ensure client alignment.
PRO TIP: If you serve clients in a specific niche or industry, consider creating a verified shortlist of frequently recommended software to save time.
4. Negotiation:
Now that you’ve selected the vendors, it’s time to negotiate the best deals on behalf of your clients. Make sure to discuss pricing, service levels (preferably in an SLA), contract length, discounts, and payment terms. But don’t forget about the exit clause, either!
5. Purchase:
Now it’s time for the final selection based on the previous steps.
6. Implementation and monitoring:
This depends upon your agreement with the client, but many tech advisors will help clients with implementation, onboarding, and monitoring to ensure success. You may want to consider periodic check-ins as well to keep the door open for further collaboration with clients when needed.
The good news is if you’ve been following the tech advisory process outlined in the previous section, the first two steps in procurement — Needs Assessment and Vendor Research — are more or less done.
This means you can shift your focus towards vendor selection, negotiating, and purchasing in the procurement phase.
Making the Most of 2 to 1 Opportunities
A 2-to-1 opportunity is when choosing one option over the other results in twice as many advantages or benefits.
In tech advisory, this commonly occurs when consolidating tools because clients often have several apps in their stack that provide similar functionality, which can cause integration gaps and other inefficiencies.
This is a golden opportunity for advisors who can help clients streamline their tech stacks. By reducing the number of apps clients use, tech advisors are able to achieve significantly better value, lower service fees, and a better-integrated tech stack for clients.
Basically, using fewer apps saves clients money. Fewer apps also reduces the number of integrations, project complexity, implementation risk, and unforeseen issues, which all lead to project delays and cost overruns.
Sometimes, you might have to choose between two apps that are so close in functionality that the deciding factor is whichever has the best price and value.
Prepping for the Negotiation
To prepare for the negotiations, gather the vendor research you conducted during procurement and review the market prices of the software you explored.
Additionally, look into similar competitors, their prices, and how those prices are structured (i.e. are there pricing tiers, a la carte, or subscription-based, etc).
These prices and pricing structures can be used as benchmarks during your negotiations and could even provide leverage during the negotiation to help you get the best deals for your client, like if the vendor quotes a price much higher than the market prices, you could point to other competitors and ask why their price is so high in comparison.
You should also look at competing offerings to see what’s included or not to get a better idea of how certain services are priced.
For example, one service could offer on-demand customer support available 24/7, whereas a competitor’s support team might only be active during standard business hours, Monday to Friday.
All other things being equal, you could assume that the price difference is due to the different support levels, which provides insight into how much that extra level of support actually costs.
Review the Client’s Budget and Expectations
Now that you’re armed with your research, you’re almost ready for the negotiations.
All that’s left to do is review the client’s budget and expectations as a refresher to ensure you deliver everything the client wants.
Four Negotiation Strategies
Here are a few strategies to keep in mind when you’re at the negotiating table.
1. Have a ‘minimum acceptable outcome’
It’s also helpful to outline some deal-breakers and to come prepared with a minimum acceptable outcome (also known as ‘your least acceptable agreement’) where if it’s not met, you’re willing to walk.
Remember — it’s not the end of the world if you have to walk away as long as you have a backup plan, and you can always refer back to the vendor shortlist you created during procurement.
There’s also BATNA — which stands for “best alternative to a negotiated agreement” — which is about having a backup plan and figuring out the best thing to do if you’re not able to reach an agreement.
An example of a BATNA would be negotiating with a different vendor on the shortlist if the current negotiation doesn’t work out.
2. Have a win-win mindset
One of the most important parts of negotiating is your mindset going into them. Contrary to many movies, negotiations don’t have to be confrontational or fraught with tension.
Look for common ground and create mutual value. It’s not about getting the biggest slice of the pie while everyone else goes hungry. The better approach is looking for ways to make the pie bigger so everyone can eat.
3. Negotiating is not a zero-sum game
You want to avoid seeing it as a zero-sum game where anything you gain must be at the expense of the other party, and vice versa. It can create an adversarial relationship from the start and it doesn’t foster a sense of collaboration — quite the opposite — which isn’t what you want when you’re looking to build long-term business relationships.
4. Trying adding value in different ways
Thinking of adding value as trying to make the pie bigger. Ask if there’s a better rate if you get a service bundle, or if there are volume discounts for bringing more users to the platform. It also never hurts to ask about seasonal promos or free add-ons. Signing a longer-term contract (like a one-year versus monthly) often comes with additional discounts as well.
Sample Negotiating Phrases
Have these phrases handy for your next negotiation:
- “Given our long-term collaboration potential, could we explore a more favourable pricing structure?”
- “Are there any current promotions or discounts applicable to this purchase?”
- “If we were to adjust x, could we agree on y?”
- “What other options could we explore if this doesn’t work?”
Don’t be afraid to make variations or edit them for a specific situation.
Six Negotiating Don’ts to Avoid
- Don’t accept the first offer without negotiating.
- Don’t forget the exit clause.
- Don’t be too aggressive.
- Don’t focus only on price.
- Don’t rush.
- Don’t take it personally.
Procurement and negotiating
Every industry and niche has those apps that everyone uses, or, at the very least, everyone’s aware of them. For accounting, that includes apps like Xero and QuickBooks. Then there are the countless firms and agencies that use Google Workspace, Microsoft 365, or Canva.
Procurement and negotiating is where tech advisors really get to shine because it’s how they take those tools and build a new tech stack that fits the client’s exact specifications.
The negotiation can be the most exciting part of the job and there are many different strategies to consider, but the main takeaway is to remember you’re trying to build a relationship that will last long-term.
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