"Would I have liked the cash up front?" says Zubok. "Of course. Would I have liked to have the higher revenue? Yes. But I'd prefer to have the long-term relationship."
Giving to Get
Even in a buyer's market, companies must be smart about the concessions they exact. "You could get a very good price but not a very good deal," warns Guardian CIO Wander. A vendor asked to lower a price, for example, may do so by cutting back on contracted services. "All of a sudden the infrastructure is not refreshed as quickly or the staff is more junior," says consultant Rutchik.
To avoid this, Rutchik suggests that buyers prepare for negotiations by identifying contractual modifications they would be willing to make in return for a midcontract price break. Points of compromise could include stricter liability requirements (triggered by vendor nonperformance) and rigid service-level guarantees (such as 99.9 percent uptime), which can create costs for the vendor without adding much value for the customer.
Ultimately, vendors still have to see something in the deal for them. "It's got to be much more than pounding the table and saying, 'Hey, times are hard — lower my prices,'" says Rutchik. "There has to be a credible rationale and a well-thought-out argument." After all, vendors may be willing to share the current economic pain, but few want to shoulder all of it.
Robert Hertzberg is a freelance writer and editor based in Port Washington, New York.
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