Fair Deal Philosophy

ICN’s Fair Deal Philosophy was developed in 2001 in response to many client requests for a statement of negotiating philosophy that they could give their vendors at the outset of a negotiation.  Of key interest these days is the our view on partnerships.  While many suppliers claim to be “partners,” how many actually share the risks?

There are inherent risks in developing, implementing and using high technology solutions.  These risks are compounded by today’s rapidly changing and highly competitive environment.

Because of the uncertainty of the marketplace, the increasing complexity of the solutions, and the increased investment required to develop, deliver and implement these solutions, we will pursue relationships with a few select suppliers.

A partnership must be mutually beneficial and share the risks the alliance encompasses.  Such a relationship would embrace the following axioms:

  • Our relationship will contribute to our mutual profit and growth.
  • The risk of implementing and using technology solutions shall be shared.
    • The relationship will promote continuous and measurable improvement in the people, products and services of both organizations.
    • Our supplier partner shall share our dedication to customer satisfaction and quality.  
    • Both parties will always maintain the highest degree of integrity and ethics in their dealings with each other, their employees and the public.
    • Both parties will always strive to eliminate ambiguities and omissions from the spoken and written terms of the relationship by communicating with clarity of purpose and expectations. 

The Professional Acquisition Philosophy

Nearly twenty years ago, we developed the Professional Acquisition Philosophy.  Its tenets are as relevant today as they were then.  These relationship fundamentals are worth reviewing.

The professional acquisition philosophy is set around the following axioms:

  1. In any major business transaction, both parties have a right and, indeed, an obligation to determine the goals and objectives that they wish to achieve in the transaction.
  2. The goals and objectives desired by one party may create actual or potential costs or risks for the other party. Where this circumstance occurs, the party facing such costs or risks has a right and an obligation to identify the costs and risks and to limit or protect against them or, alternatively, to require additional consideration for accepting them.
  3. Responsibilities, costs, and risks should be discussed, understood, and allocated in an honest and open business manner. Although the advocacy and sales process almost always results in the use of puffery and convincing argument, both sides should avoid efforts designed to foster or permit misunderstanding and deception, regardless of source or reason.
  4. Honest mistakes and misunderstandings may occur in the negotiation of any complex business transaction. Neither party should falsely claim such problems, but where these problems occur both parties should work honestly toward their resolution.
  5. The best contract is one which accurately sets forth the mutual understanding of the parties on all relevant issues. Such a contract invariably involves compromise, both in substance and specific language. This type of contract should be the negotiating goal.
  6. A good contract must contemplate that one or both parties may fail to perform their obligations under the agreement for any number of reasons, including reasons beyond their control. Therefore, the contact should include clear standards of performance and remedies. Such an approach may actually reduce the likelihood of major disputes, by specifying the mutual obligations of the parties on all relevant issues.

            The professional acquisition philosophy recognizes that, in an ideal world, the best method of achieving optimum and mutual success at the bargaining table is for both parties to work together in a professional atmosphere to agree on how responsibilities, costs, and risks will be allocated, and to document the resulting compromise in a clear contractual agreement.

            The philosophy requires that each party treat the other as a professional to be respected for his or her honesty, expertise, and mutual desire to fairly document and consummate the transaction. In this regard, the philosophy requires a cooperative negotiating environment rather than an adversarial one. It also requires that each party be willing to listen and respond to the concerns expressed by the other side.

            In the professional philosophy, neither side “wins” in the traditional sense. Indeed, it might be said that neither side wins unless both sides win. As a result, negotiating factors such as aspiration level and psychological leverage must be directed away from achieving victory at all costs and toward achieving an acceptable, fully-understood, and well-documented compromise. Ploys and manipulative strategies and tactics have no place in negotiations governed by the professional philosophy.  Despite this fact, advocacy, sound reasoning, and effective, forceful communication play strong roles under the professional philosophy.

A Unique Opportunity

            One of my favorite events each year is the IT Procurement Summit produced by Caucus – the Association of Technology Procurement Professionals

            What sets the IT Procurement Summit (ITPS) apart from other conferences, seminars and workshops is that its intimate size creates an environment charged with enthusiasm for the profession. 

            Thanks to the efforts of the Caucus Executive Advisory Committee – a dozen dedicated volunteers from some of the nation’s leading enterprises – hundreds of topic suggestions and dozens of speaker applications are distilled into an information-packed two day, multi-track event. ITPS speakers are actual practitioners of the trade, bringing their practical experience and insight into every session. 

            The ITPS isn’t “pay to play;” that is, speakers don’t pay for the privilege, and they don’t attend with the purpose of hawking their wares. (In fact, supplier participation and access is carefully restricted.) 

            Speakers are carefully selected based on their professional experience and the topic of their presentation.  The result: a more compelling presentation and a more compelling conference. 

            And because of its intimate size, networking opportunities abound. So it’s a great chance to meet others in the profession, problem solve, and share ideas, information and experience.

            The 2011 IT Procurement Summit will be held on October 27 & 28 in Orlando, FL.

            There are two unique opportunities in connection with the ITPS will disappear on December 31.

            First, the Caucus Executive Advisory Committee issued its Call for Speakers earlier this fall.  If you’re a dynamic speaker with experience in the technology acquisition field, then you can contribute to the profession by submitting a speaking proposal by December 31.  More information may be found here. 

            Second, the Caucus Executive Advisory Committee has authorized steep discounts for those people who register by December 31 and pay by January 31.  Caucus members can register for $895 per person and non-members can register for $1,295 per person.  Email Caucus Members Services or phone (407) 740-5600 for more information.

            I hope you’ll consider taking advantage of these opportunities, so you can see why I think it’s such a great event.

Did you know?…. Microsoft Licensing Gotcha’s

by Lisa Schick

Educating your architects and IT personnel on the proper use of licenses could help you avoid costly compliance issues.  For example on most server products it is within the license agreement to have an active back up server that is used only in case of a primary server failure but if you allow just one read only instance on that back up server you are required to pay a full server license for the back up server.

Servers and virtualization – Architects often think that when they virtualize servers they are saving money on the hardware but this can become very costly with software licensing.  For example, if you are using SQL server, you can run several instances of SQL on a single server but the minute you turn the server into a virtual machine, you are now are obligated to pay for a server license for each VM you are using.  So if you have 4 VMs running on a server you will need 4 SQL server licenses.  Sometimes it is more cost effective to “beef up” your hardware using higher powered processor, more RAM and faster buses to reduce the number of SQL licenses required. Here is an example: 

Single Server Example: License to allow 16 Windows Server VM’s to simultaneously run on a 2 processor server

            Buy 16 Standard edition licenses for the server

            Buy 4 Enterprise edition licenses for the server

            Buy 2 Datacenter licenses for the server (unlimited VM’s)

Multiple Server example: 16 VM’s that are moved between 4 servers (2 processors each)

            For maximum flexibility, buy one of the three options above TIMES FOUR

            Anything less will limit the number of VM’s that can be simultaneously run on one or more servers

Any Windows server touched by an external source needs to have an “external connector” license.  So if you have a web server running windows that accesses a SQL database, you will need to purchase an EC license for the SQL server and the web server.

When using the Sharepoint application, it is import to really evaluate all of the necessary functionality.  The Sharepoint foundations product is FREE when you purchase a windows server license.  You can often use the free version of this application and build the additional functionality using available tools or possibly purchase whatever added functionality you may need from another vendor at much lower costs.

You need to pay attention to scenarios where you have an application between the end user and the MS servers.  For example, if you are running an application that uses SQL server as the backend database, any person or device that access the initial application is required to have a CAL for SQL.

Lisa Schick is a Senior Consultant for ICN (www.dobetterdeals.com), a Winter Park, Fla., consultancy that educates Professionals on IT Procurement, Sourcing, and Vendor Management. ICN sponsors CAUCUS: The Association of Technology Procurement Professionals. Contact her at lschick@dobetterdeals.com