Customer Experience – Contract Negotiations

Suspicion and doubt lead to animosity and hatred.”
Ralph Steadman

To expand upon the first post in this Customer Experience series, which was on Product Evaluation, today’s post relates to the next step, forming a contract between the customer and the winning bidder.

The customer experience during the contract negotiation stage basically revolves around suspicion. Customers are a scarce commodity for even the largest vendors. As such, they’re looking to lock in those customers for as long as they can and squeeze every penny out of customers that they can. Customers are well aware of this and seek to protect themselves from being squeezed.

OSS contracts come in two shapes – vendor-drafted or customer-drafted, but regardless of approach, they tend to replicate the complexity of the OSS project itself. In many cases they become so complex that they become unwieldy. From the customer’s perspective, the obfuscated financial models and associated terms and conditions offered by the vendors create the suspicion of being locked-in, of being charged more than expected over time and of being under-serviced. Once the fierce negotiation of terms takes place, the two sides are already on combative terms.

As Ralph Steadman indicates, all this suspicion and doubt can lead to animosity and hatred.

OSS aren’t commodity products and once implemented can be very difficult to replace. They lend themselves to lengthy customer-vendor relationships. Ideally that should be the intent of the contract; not the short-term view of the initial implementation and lock-in clauses, but the long-term relationship and ongoing mutual benefit objectives.

Starting from a base of simple, clear commercials with equally simple intent provides the opportunity to haggle without getting bogged down in the minutiae of what-if scenarios. OSS projects are simply too complex and variable to dot every I and cross every T across every implementation scenario that will arise, so if the project managers get to the point where they revert to management by contractual clause then the spectre of suspicion and doubt has arisen once more.

Contract lawyers and procurement experts will undoubtedly howl these suggestions down. They’d say that there’s too much at stake to not insert a multitude of protective clauses. That may be so, but the current customer experience tends to be a negative one, so a contrarian approach is required.

Can you describe any successful contract negotiation approaches that have delivered outstanding outcomes for vendor and customer alike? Were they built upon complex or simple approaches?

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