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During a recent project we worked on I heard some very disturbing things from the client. It was a level of gloating and bravado over the terms they had negotiated with their ERP vendor. It quickly became obvious that these people regarded most of their vendors as adversaries and not as real business partners.

I don’t think it was the aggressive discount in licensing costs that bothered me as much as the desire to “get something for nothing” – a professor of mine back in Michigan always started each term by reminding the class that one of the primary principles in business can be summed up with a mnemonic – “TINSTAAFL” There’s No Such Thing As A Free Lunch! The software vendor’s salespeople were happy to throw in extra functionality such as HR and Payroll modules, analytics and reporting tools and self-paced training in place of a much more valuable instructor-led educational foundation. Additionally, the vendor stripped hours out of the Consulting, Integration and Project Management areas of the project. The sales team also wasn’t aware that the analytics and reporting tools that now were considered an integral part of the financial reporting scheme required another $10,000-$15,000 investment in supporting server infrastructure and administrator training.

The thing that bothered me the most however, was that the aggressive negotiating actually had a personal impact on the consultants and project managers assigned to the project. In this instance, the client bragged that they had negotiated non-payment of travel time. The end result was that the consultants and project managers on the team lost more than 8 hours per week in billable time travelling. Why is this a big deal? In the professional services organization of most software companies the consultants and project managers’ performance metrics are based on, among other things, Customer Satisfaction and Utilization Target, or how many of their waking hours are billable. I’ve seen with some large companies that the Utilization Target was so high that even using their generous vacation allotment prevented the consultant from achieving their target, losing bonus pay and even possibly being placed on a probation of sorts. To mitigate these challenges motivated consultants will do whatever it takes to hit their target – this usually leads to increased weekend travel and off-hours work, among other things. For young, single professionals this can have an impact on their social life, launch a lifelong struggle with work-life balance, impact friendships and relationships and even lead to unhealthy behavior. For older, more experienced consultants, this can have a significant impact on the family. More time away from the family puts additional stress on the spouse left behind, whether it’s loneliness, shouldering the burden of managing the household or additional time away from children. The net result? More often than not, this perpetuates the adversarial relationship, adds considerable stressors to vital members of the project team and ultimately, reduces the overall quality of the project.

What are the options? I think it’s very important to keep in mind that you’re entering into a relationship that not only includes the faceless executives of the organization, but also the real people who will be committed to making you happy and delivering quality in the project. Keep perspective based not only on negotiations that your customers drive with you, but also, the relationships you have with your own employees. The professional services team, for a short time, becomes a part of your company’s culture – think of them as you would your own employees.

I would never recommend that you should shy away from effective negotiating. We make this an integral phase of every project. But I encourage you to be aware of the final impact to the project, and to the people who will, for a short time, call your company Home after the contract is signed.

What are your thoughts? Have you been impacted by a contract negotiated too harshly? As an ERP or CRM Consumer, have you seen quality suffer from such hard-nosed negotiation?

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