How to deal with Procurement
Lies, tricks and tactics
Procurement people are professional liars negotiators. Once you accept and embrace this it becomes much easier to deal with them.
While your champion buys software maybe once every couple of years and needs your help to guide them through the process, your procurement contact does it for a living and has their own playbook of psychological tricks negotiation tactics designed to pressure you into submission.
Common procurement tactics include:
“Your competitors are cheaper”
“Our budget is fixed”
“These are our standard terms”
“The CFO won’t approve this”
“This may slip into next month / year”
“You need to run everything through me”
Giving you the silent treatment
This issue covers how to specifically deal with each of these tactics plus some background on how Procurement fits into the overall company structure.
Contents
How procurement teams are measured
Why Procurement is not as powerful as you think
How (not) to negotiate with Procurement
How to counter common procurement tactics
How procurement teams are measured
In most companies the Procurement function sits within the Finance department and is measured primarily on maximizing commercial terms in favor of the company. e.g.
Maximizing discounts
Putting in caps on annual price increases
Eliminating auto-renewal provisions
Lengthening payment terms
In some companies Procurement is also measured on minimizing risk (e.g. liability, compliance, security), however the negotiation of those pieces is typically farmed out to other teams (e.g. Legal, Compliance, InfoSec, IT) with Procurement just coordinating the results and summarizing them for final review.
Why Procurement is not as powerful as you think
If you take Procurement’s words at face value it’s easy to fall into the trap of believing that they have the power to kill your deal. That’s just not how it works.
The reality is that budgets are owned by department execs (e.g. CMO, CRO, CTO, CISO, CHRO, CLO, GC etc, sometimes VPs), not by Procurement.
If an exec wants to buy software or services and has room for it in their budget, Procurement can’t block it. You’re more likely to get blocked by InfoSec or Legal for security or compliance reasons than you are by Procurement for commercial reasons.
All that Procurement can do is try to negotiate the best commercial terms they can tell their boss (the CFO) how much they saved and justify their existence.
How (not) to negotiate with Procurement
The two basic rules for negotiating with Procurement are
Never negotiate over email. Instead get on a call with them. Procurement usually gets introduced to you via email, so check their email signature for a phone number and give them a call. They’ll probably answer and will be taken off guard.
Never negotiate until you have a verbal commit from your champion. Knowing the willingness of your champion (and exec sponsor) to move forward with you is essential for navigating Procurement.
Here’s what to say when they answer: