November 21 - Day 5: Writing the Contract: Essentials to Include - InformationWeek

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November 21 - Day 5: Writing the Contract: Essentials to Include
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Interesting discussion. Have a good weekend and Thanksgiving.

Great session, thanks for hosting it. Good Day Everyone!

Ninja

@jfeldman, thank you for providing us with great information. I learnt a lot!

Ninja

I said, please keep in touch. If you get in touch please mention this class so that I know where I know you from. ;) I hope you all have a great weekend!

Ninja

Thanks everyone! Have a super weekend!

Apprentice

Well, y'all, we have come to the top of the hour again. This was a FANTASTIC discussion and a great capstone for the class. Thank you all so much for participating.

 

Ninja

Thanks Jonathan, that's a good point that I hadn't considered... at some point, you reach the value and then everything beyond that is just freebies. 

Apprentice

@Brian.Dean, I think the biggest difference is that you might not be signing onerous conditions about non-disclosure with an open source provider. Why might this be a big deal? In a regulatory environment or in the government open record environment, you MUST disclose certain things about software, data taxonomies, etc, and if you are with a proprietary software vendor, it can be quite a haggle.

Ninja

@Wendy, re the 2 years of service, my guess is this. The CIO knew that she was going to capture the value of the contract even within a 1 year time frame, so it didn't matter if the company was going away in a year. Now if the "vendor viability" (remember what I said yesterday about that, or listen to that class) is low, that's another story.

Ninja

One other point about consultants, Wendy. With the exception of one, I have not had great experience with the big name consultants, perhaps because I work at a mid-sized org and they don't feel like sending us their best and brightest. I tend to get better results from the smaller, boutique consultants.

Ninja

Are they any fundamental difference in negotiating with a provider that uses mostly open-source vs. proprietary software/tools?

Ninja

I was talking with a CIO who got a big price decrease by paying for 2 years of services up front and recommended that as a "negotiation tip"... it seemed like a big leap of trust to me that the vendor would still be around in two years (or even 5 months)... I'm curious what the class thinks about that "negotiation strategy"

Apprentice

@Wendy, third mistake is to not understand that when you open negotations on one leg of the iron triangle, that it is a "re-opener" of the other two. If you want shorter term, expect a proposed change to either pricing or conditions... or both!

Ninja

You are very welcome. :)

Ninja

@jfeldman, thank you for the link!

Ninja

But the second mistake is to take a fixed price structure as a reason to walk. There may be OTHER attractive characteristics that you'll miss out on.

Ninja

@jfeldman, good point. API is important to make the top 10 most important things to talk about with the provider, while discussing an SLA.

Ninja

Wendy, I think the biggest mistake is not to explore negotiations.

Ninja

For example, here is the Open 311 API standard, which is offered by some public service applications: http://wiki.open311.org/API

Ninja

In terms of negotiations, what are the biggest mistakes that many people make? 

Apprentice

Dealing with standards is generally cheaper from a labor standpoint since staff may already have the skill set (and help is more readily available and inexpensive).

Ninja

@Brian.Dean, absolutely. The question you need to ask is what export tools are available, and if not, what are the data standards or APIs that are used.

Ninja

But you are 100% right, Charlie, that this has to be part of the contingency plan!

Ninja

If a SaaS provider does not have data export tools then it costs by the hour to pay a programmer to export and import data.

Ninja

Also, @Charlie, sometimes the use case justifies the expense of the data takeout, because you're saving SO MUCH DARN MONEY by moving in the first place.

Ninja

@wendy, it's really ALL about a DEEP reference check. Not the kind where you say "would you use them again" and call it a day. It's about finding out what their accomplishments are and fact-checking with their previous clients to see if they agree, to start.

Ninja

... but most SaaS providers don't charge extra to export data and if they do it's negotiable. As I said in the preso, for me that's a deal breaker.

Ninja

Charlie, it depends on what you're talking about in terms of moving data. IaaS... yes, that is the model.

Ninja

@Jonathan, any consultants you care to name check? What are your rules for finding awesome consultants?

Apprentice

... and of course, the same principle applies that applies to all negotiation: the bigger the deal size, the more opportunity for savings.

Ninja

Consultants could highlight important consideration that need to be in the SLA as well -- money well spent.

Ninja

@Wendy, I have literally saved the price of the (expensive) consultant x 2. However, you need to be careful and choose someone with deep knowledge and experience.

Ninja

It's not that easy to switch masses of data between clouds. The charges are incurred as you take data out, not as you move it in. And you can't be sure the way your internal systems work with one cloud will link the same way to another. It's not just a negotiating issue. There are significant barriers.

@Jonathan excellent point... a consultant worth their salt has probalby dealt with that vendor before too.

Apprentice

Wendy, I fear that you are right.

Ninja

I often wonder if the sales people have the ability to make the kind of negotiation changes to the "iron triangle" points... is it a possibility to very diplomatically find out if they have that power or if you need to "talk to their manager" or something? I mean, it might just shut everything down and create an adversarial relationship. 

Apprentice

@Wendy, also, a good consultant in the space will generally have pricing intelligence which can be worth the price of the consultant.

Ninja

Nice points @Brian and @Jonathan! Charlie's right, I KNOW a lot of people don't do that.

Apprentice

You won't necessarily get information where you can reveal the source, BUT if YOU know and the PROVIDER knows that you're citing current customer payment data, negotiations go a lot smoother.

Ninja

@jfeldman, great point.

Ninja

@Brian.Dean, I think that getting established private organizations to share their customer data (including what people are paying) is a lot harder than playing what @Wendy is calling spy-v-spy. This is one of the reasons it's important in the IT business to have a good professional (not data) network

Ninja

And I bet a lot of people don't do that. You're talking complications....

@Brian.Dean, negotiation plays a lot better when you have MULTIPLE providers that you are negotiating with.

Ninja

@Wendy, good question. I wonder if it would be ok to ask the provider for thier SOFP to view their markups and margins.

Ninja

Charlie, exactly. It reminds me of telecom penalties, where you get reimbursed for that TWO HOUR WINDOW that your line was down, PRORATED over a 24x7, 30 day period. Meanwhile, your business suffered a LOT MORE harm.

Ninja

Too little caffeine today...

Ninja

Yeah, penalties for cloud suppliers amount to peanuts for payouts after an outage.

@Charlie, yes, remedies are part of "conditions". Remember the iron triangle! ;)

Ninja

Do you have any tips for how to find out what the vendors' other customers are paying? I ran into a situation where the vendor was charging a big company less money for more services because it wanted that large company to make it look legitimate. If you weren't The Empire, Inc, you paid (proportionately) a larger fee. In that situation, it's obviously harder to figure that out, but should everyone play spy vs spy to find out what the vendor is charging?

Apprentice

Hello @dtarpkin, welcome. :)

Ninja

Jonathan, you bring up a good point on remedies. I know that many vendors try to have conflict resolution clauses that favor them (in terms of jurisdiction or method): Is that something that you will negotiate with the rest of the contract?

Strategist

My apologizes for beng late.....

Apprentice

Should a business be focused negotiating with a single provider at a time for a service or multiple providers should be negotiated with simultaneously?

Ninja

Charlie, good point. And you can, contractually. BUT, like all contracts, just having a condition in the contract is not enough to prevent bad behavior. It can "guarantee" remedies (after being tied up in court for years, LOL)

Ninja

"Never make an ultimatum unless you're ready to carry it through."

Ninja

Your data can start out in one location and two years later, end up in another. Maybe there's a way to require a notice and pre-approval from the customer, before any move is made.  

Span of control is one of the most urgent IT conversations of our time, IMO.

Ninja

Jonathan, it feels like the question of negotiations really is about control... you almost need to be ready to walk away to have any kind of power. But what if that's the last thing you want to do... does that mean you are basically just going to take what they offer? Isn't this really all just a game of IT chicken?

Apprentice

That can be HUGE for regulated industries!

Ninja

Charlie, thanks for bringing up location of data!

Ninja

Yes, try to get the mix of service that's best for you. Does any one trust Amazon's Trusted Advisor?

@Brian.Dean, I think you should negotiate EVERY TIME the contract is renewed.

Ninja

Yay! My brain is full of useless stuff like that and it finally pays off! 

Apprentice

Aha! Wendy, you win!

Ninja

OK, I think I've got the name of the man in the photo -- I'll wait to see if there are any other contestants, here.

 

Strategist

Should negotiations be viewed as an activity that takes place once and only once during signup or it should be an on-going process that comes up once every billing cycle? 

Ninja

That's a good point. I've been hearing a lot about colocation facilities in locations where energy is cheap and cooling is (pretty much) free thanks to the cold climates. I do wonder about how the risk factor increases in terms of breach.

Apprentice

Data location is important to. Do you know where your data is? Did it just get moved across the state border to a back up facility, where different laws now apply? You breach response plan just flew out the window.

I think that question of data ownership is one of the reason many healthcare organizations have been quite conservative in moving to the cloud.

Strategist

The competition for cloud providers is so fierce, I'd venture that it would be fairly easy to play them against each other in terms of price elasticity.

Apprentice

"Value-based pricing" is most transparent in the Uber model. I wonder if there are cloud providers who have as much price elasticity as capacity elasticity -- it could make things like getting Federal contracts very interesting.

Strategist

Ha, tapes! I remember tapes! (Harder to hack tapes)

Apprentice

I think Jonathan's making fun of me because I remember hacking on Z-80 systems.

 

Young whippersnapper.

 

Get off my lawn!

Strategist

@jfeldman, excited to be here.

Ninja

Hi all -Audio is live! If you don't see the audio bar at the top of the screen, please refresh your browser. It may take a couple tries. When you see the audio bar, if it doesn't start automatically, hit the play button. If you experience audio interruptions and are using IE, try using FF or Chrome as your browser. Many people experience issues with IE. Also, make sure your flash player is updated with the current version. Some companies block live audio streams, so if that is the case for your company, the class will be archived on this page immediately following the class and you can listen then. People don't experience any issues with the audio for the archived version.

Apprentice

Hello again Brian.Deen! Good to see you here. :)

Ninja

I won't be looking at the live chat during the course, but Curt will, and can shout out any questions you have, so shout away! ;-)

Ninja

Hi Wendy! Thanks for the kind words, glad you are here again. :)

Ninja

Really looking forward to the "final act" of this classroom. This has been a pretty great week!

Apprentice

We'd love to have your voice in the discussion here. To take part, just type your comment or question into the "Your Post" box and then click on the "Post" button below the box. Feel free to introduce yourself before the class starts -- I think you'll find that we're a very friendly community here! 

Strategist

Hey, everyone, we're glad you could join us! When the class is scheduled to start, at 2:00 p.m. EST, an audio player should appear above the "Your Post" window. If it doesn't appear, you might need to refresh your browser until it does. If it appears but doesn't start playing, then you may need to click on the "play" button on the far left of the player. 

Strategist

Check out the red  "Download Today's Slide Deck" under the heading, Special Education Materials above, to the right of Jonathan's picture.

should be interesting

Ninja

Jonathan told me that his slides have been uploaded - can you tell me where they are?   Thanks!

 

Apprentice


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