Surviving a Technology Vendor Acquisition

Oracle sign at Oracle Corporation hea...

(Wikipedia)

In the wake of recent acquisitions this month by IBM (who bought Aspera) and Oracle (who bought Responsys), I put together a technology vendor acquisition survival kit.  As with any acquisition, there will be changes and if your vendor is being acquired by a much larger technology vendor (think Big Blue or Larry E.) the changes could be dramatic.

So, if you’ve found out that your vendor is being acquired and are currently lost in the wilderness of vendor acquisition, this collection of great posts and resources is for you.

  1. Merger Madness – What to Do
  2. What to Do When Your Software is Purchased By Another Vendor
  3. Software Vendor Consolidation
  4. Did Your Software Vendor Get Acquired? Now What?

As mentioned in many of the posts above, create an acquisition strategy for your organization. Don’t sit back and wait for your procurement or legal department to engage you, because they may not be aware of it.  As soon as you’re aware of the acquisition, give your procurement or legal department a call and let them them know what’s going on, engaging them upfront in order to use their expertise.  Be proactive and remember that the key to surviving an acquisition is knowledge and knowledge is power.

Avoid Making Emotional Contract Decisions

contractA friend of mine is working through a difficult landlord / tenant situation. She signed the lease quickly, excited to move into the condo of her dreams. It’s close to the metro, has perfect square footage, great neighbors and the price was right. The landlord seemed nice when she was signing the lease and she felt that they had a good rapport.  Fast forward a few months and the landlord has gone from Dr. Jekyll to Mr. Hyde.  Unfortunately, she was in such a hurry to sign on the dotted line, she didn’t thoroughly read the lease and is now stuck with a bad contract that barely has any tenant’s rights.

Has this ever happened to a contract that you signed? This is a question for both customers and vendors alike.  Emotions can be high when negotiating contracts. However, the key is to read the contract and don’t enter into it with haste, regardless of how badly you want the deal.  Did you wake up one morning and think “who are these people?!” Did you sign a contract but look back later on and regret it?  Signing a bad contract is more common than you’d imagine. What can you do? Unfortunately for my friend, she’s trapped for another seven months with her landlord. But, is there a way out of your situation?

In a previous post, I wrote about Termination for Convenience. Hopefully, you’ll have this provision in your contract, allowing you to terminate the contract for convenience. If you don’t have this provision in your contract, you’re in a tougher situation. If there’s been a material breach of the contract, that would give you cause to terminate, but that’s pretty rare.

So, if the termination for convenience option doesn’t exist and you’re stuck with one another, I’d recommend having a one-on-one meeting with the vendor (or customer) and determining how to make lemonade out of lemons. This doesn’t need to be a screaming match, but it’s likely that you’re not the only one unhappy with the situation. How can both of your needs be met? Speak with them about adding a 90 day improvement period with termination language to the contract. If the improvement period doesn’t yield any results, either party can terminate the agreement. If you have internal counsel, speak with them about additional options. If you don’t have the luxury of internal counsel, consider an external counsel consultation. Keep in mind that fees may need to be paid when terminating. If this is the case, the pain may be so great that it’s worth the money. Look at Starbucks, they terminated a deal with Kraft to the tune of $2.8 billion dollars. Yes, you read that correctly. Billion with a “b”.

If the deal isn’t working out contractually, don’t let your emotions get in the way and tell you that “it’ll all work out”. Take a hard look at what you’ll need to live with if you sign the contract. Just remember that there are plenty of other vendors, clients, and in my friend’s case, condos out there.

Outwit, Outlast and Outplay Your Vendors

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As most of you know, “Outwit, Outlast and Outplay” is the overarching theme from “Survivor“, the show where alliances are everything and it all comes down to one person winning a million dollars in a remote jungle halfway around the world.

What if this were a real life scenario where you saved your company a million dollars in technology spend by outwitting, outlasting and outplaying your vendors in the climate controlled jungle of cubicle city?

Outwit. Vendors are trained professionals. They’ve won the immunity challenge so many times they can run that muddy obstacle course barefoot with their eyes closed. This isn’t an affront to vendors, because they provide valuable goods and services. This is about putting on your warpaint and outwitting them to get the best deal for your company’s needs. How can you outwit them? Do your research. What products are you interested in purchasing? Look at their competitors. What are the differences between their competitor’s product? Where’s your leverage? This is a great book that I recommend reading, it’s called the “Technology Salesperson’s Handbook” . The subtitle is “114 World Proven Lessons and Tactics”. How many “world proven” lessons and tactics does the average layperson have? Unfortunately, not many. But, we can use their own tactics to outwit them!

Outlast. Time is the ultimate leverage in all negotiations. The vendors will get desperate. You’ll get desperate.  It’ll feel like a Survivor endurance challenge as you hold on with your last remaining finger.  At some point you may need to move on your position, but don’t move in the beginning of the negotiations. Take your time and stay strong, getting the products and pricing you need for your company.

Outplay. Don’t show your hand right away. For example, you’ve got a Q4 budget surplus and your boss is breathing down your neck to spend it. If you let the vendor know upfront that you’ve got cash to burn and you have to spend it by the end of the year, the vendor will bundle the heck out of that software to the tune of whatever your budget ceiling is, give you a measly 10% discount when you complain about the price and still walk away with a sweet commission and a trip to Cozumel. Don’t share information with vendors that you don’t have to share. Play the negotiation game and keep them on their toes!

As Jeff Probst, Survivor host, says in every episode, “Survivors, ready…go!”