February 2, 2012

Nail Down the Details Before Signing Any Agreements

Posted in IT, Project Management tagged , , , , , , at 10:47 AM by Solutions2Projects, LLC

Negotiating contracts with software vendors is always a challenge.  The vendors won’t commit to resources until contracts are signed but without knowing the resources and their qualifications and availability, how do you know you will get what you want?

Vendors also want to defer detailed planning until after the agreements are signed.  Once again this is at odds with best practices from a planning perspective.  During the planning, a lot of details come to light that affect the final buying decision and overall timeline and budget.  Signing before nailing down these details generally ends up being very costly from an expectation and overall resource perspective. 

 A number of years ago I was working for a biotech company and we were selecting an ERP system.  A big name player was interested in breaking into the small-midsized life sciences market and saw our company as an opportunity to make this happen. Our budget wasn’t in line with their typical installs and they were touting a turnkey solution for life sciences.  I was skeptical.  They claimed the implementation and validation could be performed within our budget.  After detailed planning and working through the resource assumptions, it became very clear that they were shifting the responsibility for significant documentation tasks to our team (which was limited) which resulted in the reduced consulting fees.  Once we shifted the responsibility for those tasks back to their consulting team (to meet our timeline), the cost went through the roof and was no longer feasible.  This was not a surprise to us.  What was surprising was that they thought they would slip it by us. 

 In other cases, I’ve been brought into manage projects after agreements have been signed and quickly realize that my client made a series of assumptions (not documented) that were not aligned with what the vendor planned to deliver.  This tends to put me in the awkward and uncomfortable position of renegotiating the contract without much leverage as my client has already committed.  It often requires significant diplomacy on my part in that I have to demonstrate what was overlooked by them during the selection process.  Since they tend to have to defend their decisions and actions internally (politics!) and the scope or budget or timeline changes once detailed planning is performed, it can get pretty hairy. 

 If you are able to work through the details before signing the agreement, a lot of this messiness can be avoided or minimized.  I recommend performing the detailed planning prior to signing contracts, working with the vendor to create detailed statements of work to minimize surprises, and generating a project charter capturing the project elements.  The project charter is an internal document but I generally have the vendor consultants read and sign as well in order to hold them accountable as members of the project team. 

 And one of thing greatest benefits of going through this process is that you can learn very quickly how committed the software vendor is to the success of your project and to your company.  If a vendor is completely resistant to investing the time to generate a detailed statement of work based on detailed planning, this is a major red flag.  I would seriously reconsider doing business with that particular vendor.  Detailed planning sets everyone up for success.

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