Part of our job as engineers is to provide the best solution to our customer whilst minimizing cost. I’m not saying we should always choose the solution with the lowest price tag, but cost should always be considered when evaluating your design. It is pretty likely, however, that your company will be a single-vendor shop. This restricts your cost-saving-ability to choosing the most cost-effective solution from your network vendors catalog. There are other ways of saving money though.
I’ve been very lucky to work in large organizations that saw value in hiring great procurement executives. The job of the procurement executive is to get the best possible deal for your company on any large transaction. Your company may mandate their involvement, so you should engage procurement early unless you want additional delays in your project. You can be unlucky, but a good procurement negotiator can work magic and shrink your project costs massively if you work closely with them.
I had coffee once with a global systems integrator who was providing CCIE-level contract engineers to my team. The systems integrator was complaining that our procurement team was screwing them to the wall for their professional services engineering costs. I had to smile at this emotional plea.
Firstly, if anyone takes a beating on professional services contracts, it is the customer and not the vendor. It makes sense to keep on good terms with your negotiating partners, but this is business and there should be no need to get emotional. Remember that if you push too hard and the offered price goes too low, the vendor may simply walk away from your deal. Maybe that’s okay.
There is a fantastic book on negotiation skills called Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher and William Ury. It’s a very easy read and promotes the idea of ‘win/win’ negotiations. Even if you never use this book in your work life, it will open your eyes to all sorts of negotiations happening around you. One of the central pillars of the book is that you need to work extremely hard to explore and solidify your bottom line before entering any negotiation.
This bottom line is one element of the BATNA – the ‘Best Alternative To A Negotiated Agreement’. The BATNA describes whatdo you do if you don’t get what you want, where is financial break even, when and how to call it quits if negotiations fail. Every vendor or salesperson will have a BATNA, and they are prepared to say “thanks, but no thanks” if you try to drive the price too low. Don’t worry too much about your vendors crocodile tears . You can rest assured that your vendor has a BATNA and they’ll use it if they have to. So…. where’s your BATNA?