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Vendor Licensing Tackling the Contract and Budgeting Monster

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Presentation on theme: "Vendor Licensing Tackling the Contract and Budgeting Monster"— Presentation transcript:

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

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

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

4 Pre - Negotiation Corporate Strategy & Vendor Licensing
Developing Content Acquisition Vision Developing a BATNA Standard 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: Faster With fewer incidents of failure At reduced total cost A Z

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

7 Possible rebalancing of information content portfolio
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 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 Developing Information Acquisition Vision
To create a competitive advantage by driving the way AZ licenses, manages and exploits published information content Information content acquisition VISION Optimise resources spent on contractual work/ negotiation Demand Management, Workflow Integration & Extend reach VALUE DRIVERS Increase Value / Manage Costs Vendor Relationship Management 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 STRATEGIC OBJECTIVES

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

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 Entrants How difficult is it to enter the market segment? Any signs of new entrants? Power of Vendors Power of Your Org Fully leveraged? Unchallenged assumptions? Fragmented vendor relationships? Industry Rivalry How powerful are they in various segments? Strong competition in sub-niches? Scope for exploiting that? Substitutes Thinking outside the box, what other solutions might there be?

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

15 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 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 Vendor Management Vendor Segmentation Business Reviews and KPIs
Vendor Relationship Management

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

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

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

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

22 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 Vendor Relationship Management (VRM) – Why Bother?
Fully exploit vendor’s capabilities Best of breed T&Cs Transparent relationship Lower total costs

24 VRM Zone – Total Visibility
Total Relationship AZ’s Negotiation Team Vendor’s Negotiation Team Total Spend Total Business Demand Now and future (3-5 yr plan)

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

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

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

28 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 vendor’s capabilities

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