ITAM: The Bedrock of Negotiating for Value

In Featured Articles, IAITAM News You Can Use, IAITAM Quarterly by IAITAM

IT Asset Managers are uniquely equipped to guide efficient foundational negotiations

It’s that process between the initial point of contact and the handshake: The negotiation.

Some people love it. Some hate it. And most fall into the category of not really knowing how to do it effectively.

Think of how negotiations usually go. Two or more people haggle over a price until they come to some kind of agreement—usually somewhere in the middle—or walk away. One or both might know what their Best Alternative to Negotiated Agreement (BATNA) is, or they might not. An organization might declare itself the winner if it believes it lost the fewest concessions rather than gained the most out of it.

This kind of negotiating is reactionary, and it could lead to a bad deal even if the price seems good.

When it comes to IT Asset Management (ITAM), practitioners are responsible for ensuring their organizations are getting the most value when the deal is done. To do that, IT Asset Managers should know what the sweet spot is before a negotiator sits at a vendor’s table.

That leads to a different kind of negotiation: One that is foundational. A foundational negotiation establishes a deal that will result in the best value. Price might be part of the equation, but there are other factors involved, too. A low price is not always equivalent to the best value.

But for an organization to use foundational instead of reactionary negotiating techniques, it first must establish what it needs to get that value out of a deal. It also must know what its BATNA is.

Building the Foundation

IT Asset Managers are unique positions in any organization. Because so many organizations depend on their technology to function, IT Asset Managers end up touching on just about every business unit within those organizations.

This is why it is essential for the IT Asset Manager to be involved in building the foundation for negotiations. The goals of a strong ITAM program are to increase value, manage inventory, make productivity more efficient, mitigate risk, and maintain financial accountability.

Practitioners who build ITAM programs around those goals have the resources to determine the best value for negotiating a contract for their assets. They have at their fingertips a toolbox that has the right equipment to do the job.

Tools of the Trade

One of the ways in which IT Asset Managers can establish value and help set the BATNA is through running a Total Cost of Ownership (TCO) analysis of their organizations’ assets. For the purposes of ITAM, TCO is the grand total of all the costs that an IT asset will incur during its lifecycle. This means evaluating both soft and hard costs from the moment of procurement through disposition.

Through the TCO process, the practitioner will learn an asset’s cost factors: Those areas where an organization will spend its money on that asset. For example, cost factors for a hardware asset could include purchase, data migration, training, maintenance, security, upgrades, and safe disposal. Each one of these factors totaled together would give the TCO for that asset.

The cost factors themselves are places to start when determining value. If maintenance fees are high for a particular asset, then a better negotiated deal might be one where maintenance costs are included. This could mean that paying more for Product A that includes the free maintenance adds more value to an organization than paying less for Product B, where maintenance fees are extra. Not having that maintenance fee included could be the BATNA point.

IT Asset Managers have other ways to help establish value. When negotiating a new contract for software, for example, the practitioner would know if some of the licenses obtained during a previous deal went to waste. For hardware, a vendor that handles disposition for an asset that has an expensive or difficult disposal procedure at the end of that asset’s lifecycle could be a better deal.

Cutting the Deals

Each organization is going to have different value factors. Those individual factors are going to help determine how to implement foundational negotiations and what the BATNA should be for a particular deal. It’s up to the individual IT Asset Managers to help their organizations figure out what those are. In doing so, those practitioners will not only be effectively managing their assets, but they also will be helping bolster organizations’ bottom lines.

References
[1] McWhinney,P. (2017, February). Rethinking Traditional Approaches to Negotiation for Better Business Results. Retrieved from http://hrprofessionalnow.ca/business/401-rethinking-traditional-approaches-to-negotiation-for-better-business-results



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