Typical chal­lenge

• A tele­coms operator is awarded the license to operate its services in a country and is there­fore in need of systems and solu­tions to deploy and roll-out its network as soon as possible to beat compe­ti­tion and gain market advan­tage.
• Stan­dard prices are non-existent, rele­vant bench­marks are limited, there are very few suppliers to choose from and hardly any resources are avail­able with up-to-date expe­ri­ence and know-how within the team. A golden oppor­tu­nity for the supplier commu­nity.
• To make the chal­lenge tougher, there are cash cons­traints and slim budgets and whatever price is finally agreed upon must match revenue streams from future custo­mers.
• Suppliers quickly deter­mine whether their client is a start-up, whether they operate on a single market, are part of an alli­ance or are opera­ting globally as well as if the client’s sourcing team is expe­ri­enced or not. Their opening offer is a clear reflec­tion of their conclu­sion. Your hill to climb can be high as a moun­tain!

Inno­va­tive approach

• Under­stand your suppliers’ situa­tion; who is on the geogra­phical market (and wants to defend their posi­tion) and who wants to break in, who is in most need of a “win” etc.
• Quickly create credi­bi­lity and show that the scope is clear, volumes are known and future expan­sion plans are visible etc., as oppor­tu­ni­stic situa­tions like these lack stan­dards for prices, pricing models and terms and condi­tions.
• As always, esta­blish and increase your BATNA* and strive to elimi­nate or reduce your suppliers’ BATNAs*.
• Evaluate and nego­tiate tech­nical, project, opera­tional, legal and commer­cial aspects in parallel – avoid silos.
• Main­tain compe­ti­tion until the end and note that the total cost of ownership is far more than just the unit price.

Effect/result

• Single-country opera­tors reached and beat prices of global opera­tors.
• Up to 50%+ savings were gained, which meant a lot – espe­ci­ally when the prices offered are in the hund­reds of millions.
• Time-to-market was ever­y­thing. When the finally reached price was high but the lead-time was shorter – it was cons­i­dered going for it anyway.
• Proper handover of nego­tia­tion results to empowered contract manage­ment ensured that commit­ments were fulfilled and were not only words on a forgotten contract.

* Best Alter­na­tive To a Nego­tiated Agree­ment; a theory deve­loped William Ury and Roger Fisher at Harward’s Program on Nego­tia­tion. See their book “Getting to YES” for further details.