The Power of No

By Steve Gutzman

It is important to be comfortable saying “no” in a negotiation. Not all terms need to be agreed with, not all best and final prices are best and final, and not all deals need to be done. Unfortunately, many inexperienced negotiators think they must hang on at all costs until a deal is done. For them, saying no to a deal is like saying no to a free lottery ticket … it just might be the winner, and they can’t afford to pass up the jackpot.

From the buying side, preparing for a negotiation requires an understanding of the best “no deal.” The value put on the best no-deal option sets a limit that any agreement must not exceed in order for the buyer to agree. It becomes the point that the buyer will not go above. From the selling side, the best no deal becomes the level that the seller will not go below.

William Ury, in his best-selling book Getting to Yes, calls this the BATNA, or best alternative to a negotiated agreement. According to Ury, “The BATNA is the only standard which can protect you from both accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept.” In its simplest form, this concept means that if the proposed agreement is better than the BATNA, accept it. If the agreement is not better than the BATNA, continue negotiating. If the agreement cannot be improved, consider withdrawing from the negotiations and pursuing an alternative proposal or walking away from the negotiations altogether. Each side typically knows its own limits, which must continually be assessed and reassessed as new information unfolds. The problem is that many negotiators have only a hazy sense of their own no-deal options or how to value them. At a very basic level, buyers are taught that unless they hear no at least once, they are leaving money on the table. It’s part of the process and can be an important tactic. But let’s explore the use of no from a strategic standpoint as well.

To finish reading this artcile, click here.

Steve Gutzman is a senior advisor at ICN and a 33-year veteran of the high-tech


Worldwide Software Negotiations Training Coming to the UK

(London, 15-6-2010) – Worldwide IT Contract Negotiations Training Company, International Computer Negotiations (ICN), is coming to the United Kingdom on July 1-2, 2010, for their highly acclaimed Software: Issues, Contracts, Negotiations training class.  For 35 years, ICN has been training Global 1000 companies on how to Do Better DealsICN’s Software Negotiations Training has taught over 1000 IT buyers how to do better licensing and development deals. Click here for more information.

“How Software is Protected, Key Licensing Ingredients, Software Development, Pricing Models and Strategies, Avoiding Litigation, Prioritizing Objectives are just some of the topics the business community will see,” says CEO Joe Auer Sr.  People looking to register for this 2-day event must do it in advance.  Training will take place at the headquarters of BP in London and sign-up is available through “Anybody that is involved with the acquisition of Software, including legal, IT, finance, procurement and contract or vendor management, needs to see this course,” says Auer.

Since 1975, Winter Park, FL based ICN has provided critical training and consulting in high tech procurement, vendor management, and negotiations, establishing a reputation that sets it apart from the competition.  Internationally, ICN has presented both public and customized on-site seminars in countries around the world including the United Kingdom, the Netherlands, Malaysia, Canada, Australia, New Zealand, Hong Kong and Singapore.


Don’t Let Vendors Hold You Hostage

By Joe Auer

The following onerous provision regarding a customer’s payment obligations was uncovered during a review of a vendor’s proposed software licensing contract: Licensee shall pay vendor the fees set forth. . . . Without limiting vendor’s remedies, if licensee fails to pay in a timely manner any amount due, vendor may, in its good-faith determination, place licensee on “hold.” During any hold period, licensee will not receive any support or updates. Licensee shall reimburse vendor for any and all collection costs (including attorneys’ fees) incurred by vendor in the collection of past due amounts.

The vendor, in its self-proclaimed infinite wisdom, is demanding a unilateral right to cease its performance obligations if it perceives that the customer has an unpaid balance.

Never agree to such a provision. You have an obligation as a user of a vendor’s intellectual property to pay all valid amounts when due, but a vendor shouldn’t have a unilateral right to cease performance without notice if it believes you haven’t paid some amount.

Several issues need to be dealt with in this vendor’s boilerplate language. A vendor’s fundamental objective is to make sure it gets paid, and we, as customers, should provide assurance that we will pay. But that assurance shouldn’t require that we assume any additional and unreasonable risk.

Clarity Beats Faith

A big problem in this provision is that the vendor can cease providing support and updates if it believes money is due. It would be more reasonable if, after providing appropriate notice, the vendor were to invoke a hold period only if the customer fails to pay a support bill.

What if the unpaid invoice is for consulting services or shipping charges? Then suspension of support shouldn’t be tolerated. In an equitable agreement, the remedy must match a vendor’s loss but isn’t intended to give it any additional benefits or create additional risk or hardship for a customer.

Another intolerable part of this provision is the vendor’s right to act “in its good-faith determination.” A vendor’s idea of good faith may be very different from yours. Both parties must define and agree to what’s being said in such good-faith provisions. Clarity beats faith every time.

Under this standard vendor boilerplate, the vendor also retains all other remedies, such as the right to go to court and obtain an injunction.

Don’t be inclined to give a vendor multiple remedies for a single infraction on your part. The remedy should attempt to make a vendor whole for a single infraction and nothing more.

Here’s a better way to write the provision – one that gives a vendor adequate protection but isn’t overly restrictive for a customer.

Licensee shall pay vendor the fees set forth. . . . If licensee fails to pay any valid amount due according to the specified payment terms, vendor will so notify licensee and licensee shall have a 10-day period to pay any such valid and undisputed invoice.

After such 10-day period, if licensee fails to pay any support invoice, vendor may cease to provide support for the licensed software. All other fees remaining unpaid after the notice and 10-day grace period will be subject to arbitration.

Although such wording provides one solution to the problem, there are several variations that can be just as effective. The key is to work with your vendor to arrive at fair and equitable terms that neither automatically place your applications in jeopardy nor provide excessive remedies to the vendor.

In general, the goal of all supplier contracts should be to make a customer’s payment obligation totally dependent on satisfactory vendor performance.

As much as possible, avoid customer payment obligations – such as a monthly due date, signing the contract or receiving an invoice – that are triggered by something other than an acceptable act of performance.

 JOE AUER is president of International Computer Negotiations, Inc. (, 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 him at