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June 2007 Vendor Licensing Tackling the Contract and Budgeting Monster Armand Brevig Global Category Leader, Scientific & Business Information, AstraZeneca.

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Presentation on theme: "June 2007 Vendor Licensing Tackling the Contract and Budgeting Monster Armand Brevig Global Category Leader, Scientific & Business Information, AstraZeneca."— Presentation transcript:

1 June 2007 Vendor Licensing Tackling the Contract and Budgeting Monster Armand Brevig Global Category Leader, Scientific & Business Information, AstraZeneca Joanie Olivier Executive Partner, Iconitel Consulting Services Inc. By

2 June 2007 Internal customers want more for less Vendors seem to have the upper hand Budgets are stretched as result of past high vendor price increases

3 June 2007 How to Deliver More for Less? Excel at: 1.Pre – Negotiation by Armand Brevig 2.Being Effective at the Negotiation Table by Joanie Olivier 3.Vendor Management by Armand Brevig

4 June 2007 Pre - Negotiation Corporate Strategy & Vendor Licensing Developing Content Acquisition Vision Developing a BATNA Standard Terms & Conditions

5 June 2007 How Information Content Contributes to AZs Objectives AZ The right content, in the right format, at the right cost will help us get from A to Z: Faster With fewer incidents of failure At reduced total cost

6 June 2007 The Link with Corporate Strategy Corporate Strategy drives Functional Strategy Functional Strategies drive Information Centre priorities Information Centre priorities drives Information Content Acquisition

7 June 2007 Example Corporate: …growth that will place AstraZeneca among the best in the industry R&D: Deliver a portfolio of differentiated medicines that meet patient needs.. Increased focus on diabetes research Possible rebalancing of information content portfolio

8 June 2007 Developing Information Acquisition Vision Corporate vision / strategy Key Customer vision / strategy Dissemination Unit vision / strategy Shared Information Acquisition vision Consensus of key value drivers

9 June 2007 Developing Information Acquisition Vision Information content acquisition VISION VALUE DRIVERS STRATEGIC OBJECTIVES Increase Value / Manage Costs To create a competitive advantage by driving the way AZ licenses, manages and exploits published information content Optimise resources spent on contractual work/ negotiation Vendor Relationship Management Demand Management, Workflow Integration & Extend reach Value for money above industry average Balanced resource allocation to maximise ROI Leverage and streamline key vendor relationships for added value Enhance decision making processes

10 June 2007 Staying on track Avoiding strategic drift… Management preferences Resources Organisation Vision Internal Customers Supply Market

11 June 2007 BATNA Best Alternative To a Negotiated Agreement Pretend vendor you are planning to negotiate with does not exist – what would you then do and at what cost? What alternatives do you think the vendor has – does s/he need your business to break into new market segment? Is s/he in financial difficulties? What assumptions is either side making about each others BATNAs?

12 June 2007 BATNA Best Alternative To a Negotiated Agreement A well explored BATNA empowers you to accept what should be accepted and reject what should be rejected Confidence at the negotiation table

13 June 2007 BATNA – Porters 5 Forces Look for trends and changes Industry Rivalry Substitutes Power of Vendors Power of Your Org Barriers to New Entrants Fully leveraged? Unchallenged assumptions? Fragmented vendor relationships? How powerful are they in various segments? How difficult is it to enter the market segment? Any signs of new entrants? Strong competition in sub-niches? Scope for exploiting that? Thinking outside the box, what other solutions might there be?

14 June 2007 BATNA - Example PV(yr1+yr2+yr3) >= Purchase cost Purchase cost Benefit 1Benefit 2Benefit 3 yr1 yr2yr3 Buying eJournal back files vs.document delivery

15 June 2007 YOUR Standard Terms & Conditions In-house consensus of what is important Quicker to complete contractual work – pre cleared legal language Consistency Less demands on in-house legal team

16 June 2007 Pre Negotiation Key Points Be clear on how you want information content to contribute to the success of your organisation Negotiate from a position of strength by knowing your BATNA Speed up contracting process by developing your own standard terms & conditions

17 June 2007 Vendor Management Vendor Segmentation Business Reviews and KPIs Vendor Relationship Management

18 June 2007 Focusing Where it Matters Criticality Complexity HI LO Vendor Rel. Man. Zone Business Review Mtng. Zone Cost Management Zone Strategic Collaborative Opportunistic

19 June 2007 Cost Management Zone LO HI Value potential Ease of implementation Bargaining Use emotion Spend more Consolidate Framework agreements Charge back Use free / low cost alternatives Pay per view Cancel Emerging alternatives

20 June 2007 Business Review Meeting Zone Jointly agree Key Performance Indicators (KPIs) Consistently meassure KPIs Jointly examine root causes for performance gaps Agree corrective action

21 June 2007 Business Review Zone: KPI Development Customer Perspective Financial Perspective Supplier Quality Perspective Communication Perspective KPIs

22 June 2007 Business Review Zone: KPI Development Good KPIs should be: –Relevant to your information acquisition strategy and vision –Difficult to manipulate but easy to generate –Mixture of output, input, and process KPIs –Limited to the KEY ones. 2-3 in each areas

23 June 2007 Vendor Relationship Management (VRM) – Why Bother? Fully exploit vendors capabilities Best of breed T&Cs Transparent relationship Lower total costs

24 June 2007 VRM Zone – Total Visibility Total Relationship Total Spend Total Business Demand Now and future (3-5 yr plan) AZs Negotiation Team Vendors Negotiation Team

25 June 2007 VRM Zone – Total Relationship Contract/Service specific boilerplates Service specific contract terms Framework Agreement outlining boilerplate terms

26 June 2007 VRM Zone – Total Spend AZ Group Subsidiary A Subsidiary B Vendor Group Subsidiary A Subsidiary B dB subscription eJournals Reprints Advertising Sponsorship Publishing/Editorial Board

27 June 2007 Total Business Demand Marketing R&D Legal Sales IT Planned activities w. impact on info. acquisition 3 – 5 yrs.

28 June 2007 Vendor Management Key Points Focus where it matters Work with vendors to improve performance on both sides Leverage total business relationship to fully take advantage of vendors capabilities


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