What Vendor Thinks in Negotiating IT Deal

Vendor has unique dilemmas in negotiating IT deal. In Indonesia, vendor (especially software company) do not have leverages as their competitor in US or UK. Indonesian-buyer still believes in branded software.

The followings are some issue i had encountered when i represented vendor on a IT transaction:

-methodology of services
Yes, software vendor is in the services business, not goods business. This is a “slip” where marketing people of vendor lose their client. I found several items need be double-checked by marketing team to the programmer team, whether the service includes (i) continuous improvement (ii) technology refreshment (iii) knowledge sharing.

-qualification of obligation
whether it is a result obligation or effort-basis obligation. For effort-basis obligation we know there is three degree of effort:
a. best endeavors (must at least do of all that reasonable persons/ good vendor reasonably could to in the same circumstances)
b. reasonable endeavors (do all that reasonable person reasonably could do in the same circumstance under its own commercial consideration; the vendor shall not sacrifice its commercial interest)
c. all reasonable endeavors (middle ground between “best” and “reasonable”)

-SLA (service level agreement)
vendor has interest on how their technical obligation is regulated under SLA:
a. SLA during transition
b. SLA after transition
c. SLA modification procedure

-reasonable obligation
each party has economic interest to ensure that the contract is performed satisfactorily. Client wish to get acceptable services from vendor. Vendor wish to meet desired performance and get paid.

From client side:
a. duty to cooperate
b. provision of infrastructure
c. duty to supervise
d. provision of necessary access

From vendor side:
a. “time is the essence” clause
b. availability of key personnel
c. compliance with security and access policy imposed by client
d. quality control
e. evaluation procedure

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