Master Contract Review and Negotiation for Software Agreements

Optimize spend with significant cost savings and negotiate from a position of strength.


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Software is essential to many major business functions, but the contract review process for licensing that software is a complicated, lengthy, and sometimes frustrating process.

  • The terms that vendors put in contracts are not standardized.
  • Vendors know how to capitalize on chronic IT capacity challenges.
  • Every facet of your organization has its own agenda and requirements.

A careful contract review and negotiation plan will allow you to:

  • Save approximately 5% of the overall IT budget through comprehensive contract review.
  • Negotiate in a way that prioritizes your organization's needs, and reach an agreement with your vendor that takes into account both parties’ best interests.
  • Build an internal cross-functional team across the organization that will negotiate your software contract as a team.

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Module 1: Collect and Review Data

The Purpose

  • Assemble documentation.

Key Benefits Achieved

  • Understand current position before going forward.

Activities: Outputs:
1.1 Assemble existing contracts.
1.2 Document their strategic and tactical objectives.
1.3 Identify current status of the vendor relationship and any historical context.
1.4 Clarify goals for ideal future state.
  • Business Use Case

Module 2: Define Business Use Case and Build Stakeholder Team

The Purpose

  • Define business use case and build stakeholder team.

Key Benefits Achieved

  • Create business use case to document functional and nonfunctional requirements.
  • Build internal cross-functional stakeholder team to negotiate contract.

Activities: Outputs:
2.1 Establish negotiation team and define roles.
  • RASCI Chart
2.2 Write communication plan.
  • Vendor Communication Management Plan
2.3 Complete business use case.
  • SaaS TCO Calculator
  • Software Business Use Case

Module 3: Redline Contract

The Purpose

  • Examine terms and conditions and prioritize for negotiation.

Key Benefits Achieved

  • Discover cost savings.
  • Improve agreement terms.
  • Prioritize terms for negotiation.

Activities: Outputs:
3.1 Review general terms and conditions.
3.2 Review license- and application-specific terms and conditions.
  • Software Terms & Conditions Evaluation Tool
3.3 Match to business and technical requirements.
  • Software Buyer’s Checklist
3.4 Redline agreement.

Module 4: Build Negotiation Strategy

The Purpose

  • Create a negotiation strategy.

Key Benefits Achieved

  • Establish controlled communication.
  • Choose negotiation tactics.
  • Plot negotiation timeline.

Activities: Outputs:
4.1 Review vendor- and application-specific negotiation tactics.
  • Contract Negotiation Tactics Playbook
4.2 Build negotiation strategy.
  • Controlled Vendor Communications Letter
  • Key Vendor Fiscal Year End Calendar
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