The blog on November 17 discussed the first step that should be undertaken whenever evaluating and selecting an HR system. Once you have defined project resources and initiated the project, the second step involves strategic planning and this was posted on November 24. Once the strategic planning phase takes place, it’s time to develop requirements. This third step was posted on December 4 about developing those requirements. The fourth step, Identify Vendors, was posted on December 18. On December 27, we talked about the fifth step, Distributing RFPs (or RFIs) and scoring the responses that you received from the vendors. The sixth step, developing demonstration scripts prior to the vendors coming in for demos, was posted on January 9, 2009. The seventh step, conducting scripted demo demonstration, was posted on January 27, 2009. Step number eight, selecting finalists and performing due diligence, was posted on January 31, 2009. The eighth step, developing the business case and obtaining management approval of your selected vendor was posted on March 2, 2009. Now it is time for the negotiations with the vendor and implementation planning. Pre-implementation planning was discussed with a little more detail in a blog on March 6, 2009.
After successfully completing all the previous steps of an evaluation project, the Extended Project Team and Steering Committee have arrived at a consensus as to the software vendor of choice. Since several months have now elapsed (and everyone is feeling good about the “last vendor standing”), there is a tendency to say, “Enough already, let’s throw the vendor’s ‘shrink wrapped’ license agreement over the fence to Procurement and get the implementation started next week, we’re already three months late!”
Wrong approach, but good intent. Project teams often underestimate the importance of doing their full due diligence during this final phase of the software evaluation. Remember that the software evaluation is not over until the license agreement is signed! Traditionally, the best risk mitigation plan for the company has been to launch a negotiation team with joint responsibility for this important deliverable as soon as the vendor of choice is identified. The software license negotiation should not be the sole responsibility of a single contributor i.e. the IT Director, VP of HR, Staffing Director, purchasing manager or the company legal counsel. While that approach remains viable in many companies, in the era of “Internet speed” some companies launch the process earlier, by empowering experienced consultants to begin the process while final evaluation is still underway.
This cross-functional team has been empowered by company management to represent the company’s collective talent management system needs and to negotiate to the company’s best benefit. That means shared goals, without any hidden agendas. Be alert to team members who are trying to sabotage the negotiation process because their favorite talent management system vendor was not chosen. Remember that what is said in the room at team meetings should stay in the room. If one of the team members is “coaching” their favorite finalist vendor on the side, it will decrease the team’s ability to negotiate a contract to the company’s best benefit.
The finalist vendor should not have to navigate through successive levels of negotiation meetings. If a negotiation decision needs to be made, empower the people in the bargaining room with the authority to bind the company and negotiate on the company’s behalf. It is not a good start to the long-term client-vendor relationship to come to agreement on the vendor’s price and terms and then have a “tag team” force the vendor to revisit the negotiations and change the deal. Your company needs to negotiate in good faith. Reciprocally, the vendor should also be held to the same standard. Their in-person negotiation team should include management that has the authority to bind the vendor and negotiate on the vendor’s behalf, avoiding time-consuming “tiered” negotiation sessions.
Start the negotiation phase with a kick-off meeting and outline the tasks and timeline for executing the software license agreement. (The timeline may overlap with some elements of the implementation planning phase, but don’t make the too-often mistake of starting the implementation design phase or attending the vendor training without a signed contract. You may not be able to consummate the deal with the preferred vendor and have to re-visit the evaluation.) Have regularly scheduled team meetings and distribute the meeting agenda well in advance. This is especially important when you have in-person meetings or conference calls with the finalist vendors. Present all contract issues at once, don’t single-thread them and wait until the magic time to throw the “show stoppers” at the finalist vendor. The agenda, meeting minutes and open issues report will keep the participants focused on what is really important. Significant time should be spent discussing significant contract issues; insignificant time should be spent discussing insignificant contract issues. Track all open issues and agreed upon resolutions so that they don’t fall off the table. Take careful note of any vendor promises related to upcoming features and targeted dates; these need to be recorded in the meeting minutes, as well as in the final contract.
Finally, be realistic and watch what’s happening in other software evaluation/negotiation projects, both inside and outside the company, and be ready to alter some of your practices if you see a positive trend elsewhere. In today’s volatile market place, both vendors and buyers are often learning as they go, and it’s a safe prediction to expect this same “e-business” trend to impact our discipline as well.
Parallel to the contracts negotiation phase, the Core Project Team should begin the implementation-planning phase. These project definition tasks include full gap analysis, scope development, project milestone creation, project team organization, change management and adoption planning, knowledge transfer plan, integration design, migration planning, configuration design, testing strategies, etc. Please contact HRchitect for additional details if needed.
Solving a piece of the puzzle…
Matt Lafata, HRchitect