CIOIN

With economic uncertainty lying ahead, CIOs are bracing themselves to re-negotiate IT contracts. Shweta Rao  spoke to Dr. Selvam K., group CIO of Siva Industries and Holding, to find out how to get a good bargain. Here’s what he said:

• When was the last time you re-negotiated?

Siva Industries decided to build a private cloud in March 2010 and extend S-Tel’s IT infrastructure to the entire group. We also wanted to sort out scope overlaps between two existing IT vendors. Doing this would provide us with a single point of contact for different technologies and offer cost reductions. This is what triggered a re-negotiation process.

•  I’m preparing for negotiation and I’m clueless. Give me something I can use.

Always be prepared with numbers from your market research. And do extensive research on the vendor you are negotiating with.
 Remember to always have a back-up plan if you are unable to reach an acceptable agreement in a negotiation. Your risk appetite must be balanced with the confidence of a back-up plan. Also, ensure you have a nod from your management. You should have a hard copy of the decisions taken in the meeting and ensure a person from the finance department is kept in the loop.

•  When is it not worth re-negotiating?

 It’s important to remember that time and energy are key factors—other than financial savings—when re-negotiating. A deal which saves you less than 10 percent of costs but consumes your productive time is just not worth it. Another important factor that IT leaders should keep in mind while re-negotiating is the relationship they share with their vendors. Remember, you are building a bridge of trust for the future. I would never break a relationship because of price.