Presentation on theme: "Vendor Licensing Tackling the Contract and Budgeting Monster"— Presentation transcript:
1 Vendor Licensing Tackling the Contract and Budgeting Monster ByJoanie OlivierExecutive Partner, Iconitel Consulting Services Inc.Armand BrevigGlobal Category Leader, Scientific & Business Information, AstraZeneca
2 Vendors seem to have the upper hand Budgets are stretched as result of past high vendor price increasesInternal customers want more for less
3 How to Deliver More for Less? Excel at:Pre – Negotiation by Armand BrevigBeing Effective at the Negotiation Table by Joanie OlivierVendor Management by Armand Brevig
4 Pre - Negotiation Corporate Strategy & Vendor Licensing Developing Content Acquisition VisionDeveloping a BATNAStandard Terms & Conditions
5 How Information Content Contributes to AZ’s Objectives The right content, in the right format, at the right cost will help us get from A to Z:FasterWith fewer incidents of failureAt reduced total costAZ
6 The Link with Corporate Strategy Corporate Strategy drives Functional StrategyFunctional Strategies drive Information Centre prioritiesInformation Centre priorities drives Information Content Acquisition
7 Possible rebalancing of information content portfolio ExampleCorporate: “…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 researchPossible rebalancing of information content portfolio
8 Developing Information Acquisition Vision Corporate vision / strategyKey Customer vision / strategyDissemination Unit vision / strategyShared Information Acquisition visionConsensus of key value drivers
9 Developing Information Acquisition Vision To create a competitive advantage by driving the way AZ licenses, manages and exploits published information contentInformation content acquisition VISIONOptimise resources spent on contractual work/ negotiationDemand Management, Workflow Integration & Extend reachVALUE DRIVERSIncrease Value / Manage CostsVendor Relationship ManagementValue for money above industry averageBalanced resource allocation to maximise ROILeverage and streamline key vendor relationships for added valueEnhance decision making processesSTRATEGICOBJECTIVES
11 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 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 BATNA – Porter’s 5 Forces Look for trends and changes Barriers to New EntrantsHow difficult is it to enter the market segment? Any signs of new entrants?Power of VendorsPower of Your OrgFully leveraged? Unchallenged assumptions? Fragmented vendor relationships?Industry RivalryHow powerful are they in various segments?Strong competition in sub-niches? Scope for exploiting that?SubstitutesThinking outside the box, what other solutions might there be?
15 YOUR Standard Terms & Conditions In-house consensus of what is importantQuicker to complete contractual work – pre cleared legal languageConsistencyLess demands on in-house legal team
16 Pre Negotiation Key Points Be clear on how you want information content to contribute to the success of your organisationNegotiate from a position of strength by knowing your BATNASpeed up contracting process by developing your own standard terms & conditions
17 Vendor Management Vendor Segmentation Business Reviews and KPIs Vendor Relationship Management
18 Focusing Where it Matters HIStrategicVendor Rel. Man. ZoneBusiness Review Mtng. ZoneComplexityCollaborativeCost Management ZoneOpportunisticLOHICriticality
19 Use free / low cost alternatives Cost Management ZoneHICancelFramework agreementsCharge backUse free / low cost alternativesValue potentialSpend morePay per viewConsolidateUse emotionEmerging alternativesBargainingLOHIEase of implementation
20 Business Review Meeting Zone Jointly agree Key Performance Indicators (KPIs)Consistently meassure KPIsJointly examine root causes for performance gapsAgree corrective action
21 Business Review Zone: KPI Development Financial PerspectiveKPIsCustomer PerspectiveSupplier Quality PerspectiveKPIsKPIsCommunication PerspectiveKPIs
22 Business Review Zone: KPI Development Good KPIs should be:Relevant to your information acquisition strategy and visionDifficult to manipulate but easy to generateMixture of output, input, and process KPIsLimited to the KEY ones. 2-3 in each areas
23 Vendor Relationship Management (VRM) – Why Bother? Fully exploit vendor’s capabilitiesBest of breed T&CsTransparent relationshipLower total costs
24 VRM Zone – Total Visibility Total RelationshipAZ’s Negotiation TeamVendor’s Negotiation TeamTotal SpendTotal Business DemandNow and future (3-5 yr plan)
25 VRM Zone – Total Relationship Framework Agreement outlining boilerplate termsService specific contract termsContract/Service specific boilerplates
26 VRM Zone – Total Spend AZ Group Vendor Group dB subscription eJournals Subsidiary ASubsidiary BVendor GroupdB subscriptioneJournalsReprintsAdvertisingSponsorshipPublishing/Editorial Board
27 Total Business Demand Marketing R&D Legal Sales IT 3 – 5 yrs. Planned activities w. impact on info. acquisitionMarketingR&DLegalSalesIT3 – 5 yrs.
28 Vendor Management Key Points Focus where it mattersWork with vendors to improve performance on both sidesLeverage total business relationship to fully take advantage of vendor’s capabilities
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