Feature

ERP Journey: Negotiating More Than 'Bare Necessities' in ERP Contract

Recently I had the opportunity to practice spontaneous negotiation during my annual fishing trip to Alaska. It seems that a local and I had been planning to fish the same stretch of river at the same time. While sure of my legal position, thanks to the valid fishing license on my person, I felt compelled to examine the nonlegal and noncommercial factors after seeing him stand, stare and establish his 7 1/2-foot Alaskan brown bearhood. Though I was across the river and 40 feet away, we communicated perfectly.

It is a tribute to my negotiating skills that the entire process took place without verbal communication, unless you count the subsonic sounds of quivering and my initial "Oh [expletive]!" In a matter of seconds we moved past the fishing-on-the-river claim and on to my survival. We finally agreed that if I backed away slowly and then turned and ran for my life, everything would be hunky-dory. Maybe it was just the wind whistling past my ears, but over the sounds of clomping wader boots and rapid breathing I thought I heard him humming "The Bare Necessities" from The Jungle Book.

Vendors' standard form contracts aren't nearly as clear as bear negotiating, but they are equally one-sided. When you boil them down, they say, "The playing field is tilted in our favor, and our attorneys have informed us that this is how things should be. We will try to do a good job, but if we don't, well, we'll feel pretty bad for a while. You, on the other hand, must pay us a lot of money before we do a darn thing, and if you screw up, the laws won't allow us to get all we deserve from you."

We had spent eight months establishing confidence in our prospective vendor. However, after I read their standard contract, the phrase "trust but verify" popped into my head.

If we were a larger organization, we might have our staff attorneys talk with the vendor's staff attorneys and -- wait. We don't have an attorney on staff; they do. Guess where the process will get bogged down?

If you've ever ordered a car from the factory or had a house built for you, then you know how hard it is to wait for the goods once you've picked what you want. We devised a two-track strategy to shorten the wait and streamline the process. Track One would focus on getting a contract signed, starting with the writing and signing of a letter of intent. This letter, signed by both parties, would memorialize all the known issues and make sure there weren't any deal killers. Co-writing a document that states that either party can opt out of the letter of intent, without recourse -- what could be simpler?

One of my associates asked me, "Why waste time on something unenforceable?" Fair question. I told him it was like bread crumbs that we dropped together, making sure we didn't get lost negotiating the "whereas's and wherefores" of the contract. He wasn't convinced.

Track Two would proceed with planning and analysis, incurring costs as if we had a contract. We invited our ERP supplier's project manager to a two-day project-planning meeting where we agreed on both a possible and a probable implementation schedule. We also assigned some data capture and cleansing homework to our internal project team and followed that up with a fast-track software training overview. This team consists of eight associates who will spend 50% or more of their time on this project for the next 8 to 12 months.

In retrospect, streamlining this process was a little like improving the aerodynamics of a sloth. Track Two, the planning and analysis, went forward on schedule without a hitch. Track One didn't. While we were able to agree on the content in the letter of intent, getting from plain English to contractual language took weeks.

This was first published in June 2005

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