Few IT leaders recognize when a salesperson is exaggerating product capabilities (or omitting limitations). In practicing their craft, salespeople hone their pitches to a gleaming sharpness. They can demonstrate how their product meets a variety of needs, and they can counter virtually any objection or concern the IT team might raise.
Absent an experienced vendor management group on the IT side of the table, the two parties in a sales presentation are badly mismatched. The vendor’s representatives spend all their time doing exactly this, whereas most IT buyers send people who use technology, but don’t buy it for a living. The IT team has a distinct disadvantage.
In preparing to make a large purchase, you of course must employ the obvious due diligence. Get competitive bids. Ask current customers about product features, technical soundness and vendor responsiveness. Download and evaluate available test versions.
But even after you have narrowed down your choices and started meeting with vendor representatives, you can’t let your guard down. Fill your team with natural skeptics and prime them to spot any of the following warning signals:
- The sales team fails to make vendor staff easily available. If vendor support seems spotty before you sign the contract, you should expect it to be even worse once you do. For the vendor and its salespeople, a signed contract is the shiny brass ring, and they will do just about anything to reach it. When you’re still in talks with the salespeople, you should expect the vendor’s product specialists to help your analysts understand product capabilities, the vendor’s technical staff to help your technical staff understand how to integrate the product with the rest of your infrastructure, and the vendor’s executives to assure your executives of their importance as a customer and of the vendor’s commitment to excellent service. If you see any hesitancy in the access your team is granted, there’s a good chance that the vendor sees your company as a customer of low importance. Good luck getting any attention after you sign the contract.
- The salespeople quickly agree to all requests, without analysis. Suppose you make your agreement contingent on a very aggressive implementation schedule. You want the salespeople to tell you that will be accommodated, but you shouldn’t put much faith in their assurance if they do not first confer with product specialists and the delivery team. Any request that your team makes that is unusual is likely to stress the salespeople’s product expertise to the limit. If they agree to difficult requests without reviewing the options with people in their organization in a better position to know the answer, they can easily overstate product or service capabilities. You’ll be left with an empty promise.
One CEO demanded a six-month installation schedule for a new system in order to meet commitments he had made to his customers. Without checking with her delivery team, the head salesperson agreed immediately. As it turned out, the delivery team said that six months was difficult but achievable — but they thought they had two additional months just to plan, before installation began. Nobody was happy when the differing expectations became apparent. The delivery team then wasted a month replanning in a vain attempt to fit within the six-month window, with the result that the project took nine months to complete. Needless to say, no one was happy.
- The salesperson wants to be your new BFF. Most salespeople are outgoing and gregarious, but the days are gone when it was common to woo customers with liquid lunches and expensive outings.
Today, you’re much more likely to find the sales team and the IT buying team locked in detailed discussion’s about a product’s features, capabilities and suitability for the buyer’s environment. The best salespeople have deep knowledge about what are likely to be highly complex products. If you come across a salesperson who seems like a throwback, more interested in setting up dates for elaborate meals or golf games than in discussing product specs, you should see a red flag.
- The salesperson is vague. Clarity is critical in any contract. Features, service levels and costs should be clearly documented and well understood. One company learned this the hard way. The outsourcer stated that the monthly cost would be capped at a certain amount, but when the buyer tried to model the costs based on the transaction volume and the cost schedule, the monthly cost was above that level. The sales team said not to worry because unit costs would be adjusted to cap the cost. Six months later, when the buyer lowered transaction volumes, the CFO assumed monthly costs would decrease below the cap. But because unit costs were never changed in the cost schedule, the decreased transaction volumes did not lower the bill below the cap. The buyer was very unhappy.
- Some details are left to be dealt with after the contract has been signed. When it comes to getting a contract signed, the selling and buying teams are worlds apart. A salesperson’s bonus or very job could be at stake, and vendors are always looking to pump up their sales figures. Although buyers might have a solid deadline, they are less likely to have an incentive to rush things.
A signed contract encourages the perception that the hard work is done and there is no hurry to complete contract details. A signature removes the sales team’s incentive to complete the work, and the buyer is left with far less leverage to push the completion of those details. Because the master services agreement documents the entire relationship between the buyer and the vendor, it needs to be comprehensive and accurate. If you must sign the agreement before everything is final, include language that identifies the specific schedules or exhibits that will be updated. Then keep the pressure on your team and the sales team. When there are questions and the sales team is long gone, the contract is the first thing both sides will review. If the worst happens and there is litigation, the contract will be the critical document.
Before the contract is signed, you are the big dog and everything is negotiable. After the contract is signed, you may just be left barking at the moon. Watch for sales staff behaviors that are not in your long-term best interests. And don’t fully commit psychologically before you’re ready to commit on paper. You have to keep the option of walking away as your ultimate point of leverage.
Bart Perkins is managing partner at Louisville, Ky.-based Leverage Partners Inc., which helps organizations invest well in IT. Contact him at BartPerkins@LeveragePartners.com.
This story, "Red flags to look for when making a big IT purchase" was originally published by Computerworld.